Core Insights - Fastenal Company's second-quarter 2025 adjusted earnings and revenues exceeded the Zacks Consensus Estimate and showed year-over-year growth [1] - The company's stock rose by 3.3% following the earnings announcement [1] Earnings & Sales Performance - Fastenal reported earnings per share (EPS) of 29 cents, surpassing the Zacks Consensus Estimate of 28 cents, and reflecting a 12.7% increase from 25 cents per share in the previous year [2] - Net sales increased by 8.6% year over year to $2.08 billion, exceeding the consensus estimate of $2.06 billion [3] - Daily sales also rose by 8.6%, driven by improved customer contract momentum and increased unit sales, despite a sluggish industrial environment [3] Product and Market Performance - Unit sales growth was supported by more customer sites spending over $10K per month and modest growth in average sales per site [4] - Daily sales of Fasteners increased by 6.6%, Safety Supplies by 10.7%, and Other Product Lines by 9% year over year [4] - Heavy Manufacturing sales rose by 7.5%, Other Manufacturing by 11%, Non-Residential Construction by 3%, and Other End-Markets by 8.7% [5] Digital Sales and Strategy - Daily sales through weighted FMI devices grew by 14.4%, accounting for 44.1% of net sales [6] - eProcurement sales increased by 19.3%, while eCommerce sales declined by 4.2% [6] - Digital Footprint sales represented 61% of total sales, up from 59.4% in the previous year, with a revised target for 2025 penetration set at 63%–64% [6] Margin Analysis - Gross margin improved to 45.3%, up 20 basis points year over year, exceeding the predicted margin of 44.9% [7] - Selling, general and administrative expenses as a percentage of net sales improved to 24.4% from 24.9% in the previous year [7] - Operating margin was reported at 21%, higher than the projected 20.6% and up from 20.2% a year ago [9] Financial Position - As of June 30, 2025, Fastenal had cash and cash equivalents of $237.8 million, down from $255.8 million at the end of 2024 [10] - Long-term debt decreased to $100 million from $125 million at the end of 2024 [10] - The company returned $252.5 million to shareholders in dividends during the quarter [10] - Net cash provided by operating activities totaled $278.6 million, reflecting an 8.1% increase from the previous year [10]

Core Insights - Fastenal Company reported record quarterly sales exceeding $2 billion for the first time, with an 8.6% revenue growth and a 12.7% EPS growth to $0.29 per split-adjusted share [1] - Management highlighted sustained acceleration in contract customer signings, with contract customer sales rising 11% and now comprising 73.2% of total revenue [2][3] - The company expects additional pricing actions in the second half of 2025, aiming for double-digit sales growth and a total price realization increase to 5%-8% [9] Financial Performance - Operating margin increased by 80 basis points to 21% in Q2 2025, supported by favorable price-cost effects and SG&A leverage [6] - Gross margin improved by 20 basis points to 45.3%, with management implementing three rounds of pricing actions targeting a total 3%-4% price benefit by the end of Q2 2025 [6][7] - Revenue from sites generating $10,000 or more per month grew by 11.6% [2] Contract and Customer Dynamics - The company achieved 84 contract signings in Q2, outperforming expectations despite weak end-market demand [2][3] - Contract customer sales now represent a significant portion of revenue, increasing from 71.2% a year earlier to 73.2% [2][3] - The increase in contract growth from 4% in the 2022-2023 timeframe to 11.2% last year indicates significant market share expansion [3] Supply Chain and Digital Strategy - Fastenal adapted its sourcing strategy to mitigate tariff impacts, directly importing more fasteners into Canada and Mexico [4] - Digital channels accounted for a record 61% of total sales, with e-business growing by 13.5% [4] - The installed Fastenal Managed Inventory (FMI) device count rose nearly 11% year over year, exceeding 132,000 [4] Pricing Strategy and Future Outlook - Management's disciplined cost control and proactive pricing actions are designed to offset inflation and tariffs, reinforcing profitability [8] - Additional pricing actions are anticipated in the second half of 2025, with potential to double the impact of pricing depending on tariff resolutions [8] - The company aims for a year-end digital sales mix of 63%-64%, reflecting ongoing investments in FMI technology and enhancements to fastenal.com [9]

Core Viewpoint - The article emphasizes the investment philosophy focused on identifying mispriced securities through understanding the financial drivers of companies, often revealed by a DCF model valuation [1]. Group 1: Investment Philosophy - The investment approach is not limited to traditional value, dividend, or growth investing, but considers all prospects of a stock to assess risk-to-reward [1]. Group 2: Market Focus - The investment strategy includes a major focus on small cap companies across the US, Canadian, and European markets [1].

Financial Data and Key Metrics Changes - Sales in Q2 2025 increased by 8.6%, marking the highest daily growth since early 2023, with revenue surpassing $2 billion for the first time in company history [5][6][38] - Earnings per share (EPS) rose to $0.29, a 12.7% increase from the previous year [22][45] - Operating margin for the quarter was 21%, up 80 basis points year-over-year, while gross margin improved to 45.3%, up 20 basis points [43][44] Business Line Data and Key Metrics Changes - Contract customer sales increased by 11%, now representing 73.2% of total revenues, up from 71.2% the previous year [8] - Revenue from sites generating $10,000 or more per month increased by 11.6%, with a nearly 7% rise in the number of such sites [9] - Non-manufacturing sites in the $50,000+ category saw revenue growth of 30% year-over-year, with site count increasing over 18% [11] Market Data and Key Metrics Changes - Despite sluggish end market demand, the company experienced a healthy pace of contract signings, with double-digit growth in national, regional, and government contracts for 15 consecutive months [40] - The company noted that trade policy continues to create caution in the market, but they have historically been able to gain market share during periods of disruption [42][43] Company Strategy and Development Direction - The company is focused on strengthening customer relationships and enhancing its role beyond just a distributor, aiming to deliver measurable value to customers [7] - A strategic realignment of sales teams has been implemented to better serve various customer segments, particularly in non-manufacturing sectors [11][12] - The company plans to relaunch its e-commerce platform in late 2025 to better capture spot buy needs from all customer categories [10][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit sales growth in the second half of 2025, supported by a strong pipeline of contracts [70] - The company anticipates that inventory investments will yield returns, particularly as they navigate tariffs and inflation [56][48] - Management acknowledged the uncertainty surrounding trade policies but remains optimistic about the company's ability to adapt and maintain market share [42][91] Other Important Information - The company executed a two-for-one stock split in May 2025, with prior year EPS adjusted accordingly [46] - Operating cash generation was $279 million, representing 84.4% of net income, indicating strong cash flow despite increased inventory investments [46][47] Q&A Session Summary Question: Contribution margins for $10,000+ customers - Management indicated that contribution margins for the $10,000+ customer segment align closely with company averages, benefiting from improved SG&A leverage [51][52] Question: Inventory investment expectations - Management clarified that inventory investments are already yielding attractive returns and will continue to improve as they rationalize inventory levels [54][56] Question: Gross margins outlook - Management expects gross margins to remain flat year-over-year in the second half of 2025, with deeper inventory of fasteners contributing positively to margins [62][64] Question: Sales outlook and contract signings - Management expressed confidence in maintaining double-digit sales growth due to a strong pipeline of contracts and ongoing pricing actions [70][72] Question: Enhancements to e-commerce channels - Management discussed plans to improve e-commerce capabilities to capture more spot buy needs, particularly from smaller customers [78][81] Question: Customer solution consultant program success - Management confirmed the continued success of the customer solution consultant program, which has been instrumental in driving contract success [96][97]

Core Insights - Fastenal reported $2.08 billion in revenue for the quarter ended June 2025, marking an 8.6% year-over-year increase and a surprise of +0.88% over the Zacks Consensus Estimate of $2.06 billion [1] - The earnings per share (EPS) for the same period was $0.29, compared to $0.25 a year ago, resulting in an EPS surprise of +3.57% against the consensus estimate of $0.28 [1] Financial Performance Metrics - Fastenal's shares have returned +2.6% over the past month, while the Zacks S&P 500 composite has changed by +4% [3] - The company had 64 business days in the quarter, matching the average estimate by six analysts [4] - Daily sales were reported at $32.50, exceeding the five-analyst average estimate of $31.80 [4] - The number of branch locations was 1,596, slightly above the two-analyst average estimate of 1,595 [4] - Weighted FASTBin/FASTVend signings (MEUs) were 6,458, below the two-analyst average estimate of 7,615 [4] - Weighted FASTBin/FASTVend installations (MEUs; end of period) totaled 132,174, also below the two-analyst average estimate of 133,889 [4]

Financial Performance - Second quarter net sales increased by 8.6%, primarily driven by improved customer contract signings over the past six quarters[6] - Earnings per share (EPS) for the second quarter improved 12.7% to $0.29, compared to $0.25 in the second quarter of the previous year[12] - The operating margin improved to 21.0% in the second quarter, up from 20.2% in the second quarter of the previous year[12] - Gross profit margin increased to 45.3% from 45.1% in the second quarter of the previous year, reflecting favorable price/cost dynamics and improved fastener sales margins[28] - Operating cash flow (OCF) for the second quarter was $278.6 million, representing 84.4% of net income[31] Customer Site Performance - The number of customer sites with sales over $10,000 per month grew by 6.7%, led by Onsite-like locations which increased by 12.4%[6] - Sites with sales over $10,000 per month accounted for 81.4% of net sales in the second quarter, up from 79.2% in the second quarter of the previous year[6] - Total manufacturing customer sites were 43,138 with sales of $1,575.4 million, while total non-manufacturing customer sites were 58,302 with sales of $504.9 million[7] Digital Footprint and Technology - Daily sales through eBusiness rose 13.5% in the second quarter[18] - Activity through the company's FMI (Fastenal Managed Inventory) technology platform represented 44.1% of sales in the second quarter, compared to 41.8% and 39.8% in the second quarter of the previous year and the year before, respectively[17] - Sales through the digital footprint (FMI technology plus non-FMI-related eBusiness) accounted for 61.0% of total sales in the second quarter, versus 59.4% and 55.3% in the second quarter of the previous year and the year before, respectively[18]

Group 1 - Fastenal reported quarterly earnings of $0.29 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, and up from $0.25 per share a year ago, representing an earnings surprise of +3.57% [1] - The company posted revenues of $2.08 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.88%, and an increase from $1.92 billion year-over-year [2] - Fastenal shares have increased approximately 20.3% since the beginning of the year, outperforming the S&P 500's gain of 6.4% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.29 on revenues of $2.09 billion, and for the current fiscal year, it is $1.09 on revenues of $8.12 billion [7] - The Zacks Industry Rank indicates that the Industrial Services sector is in the top 13% of over 250 Zacks industries, suggesting strong potential for stock performance [8] Group 3 - Fastenal has surpassed consensus EPS estimates only once in the last four quarters, while it has topped consensus revenue estimates two times in the same period [2][6] - The estimate revisions trend for Fastenal was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

EXHIBIT 99.1 Net sales increased $164.1, or 8.6%, in the second quarter of 2025 when compared to the second quarter of 2024. Both periods had the same number of selling days. The results largely reflect the contribution from improved customer contract signings over the past six quarters. Market conditions remained sluggish, providing minimal contribution. Changes in foreign exchange rates positively affected sales in the second quarter of 2025 by approximately 10 basis points and negatively affected sales i ...

Core Viewpoint - Fastenal Company (FAST) is expected to report its second-quarter 2025 results on July 14, with earnings per share estimated at 28 cents, reflecting a 12% year-over-year growth, and net sales projected at $2.06 billion, indicating a 7.6% increase from the previous year [1][2]. Group 1: Sales Performance - Fastenal's net sales in the last reported quarter exceeded the Zacks Consensus Estimate by 0.5%, with a year-over-year increase of 3.4% [1]. - The average daily sales (ADS) for May 2025 grew by 9.3% to $32.7 million, showing a 4.1% increase from April 2025 [3]. - In May 2025, daily sales in Heavy Manufacturing and Other Manufacturing increased by 8.6% and 12.8%, respectively, while Non-residential Construction grew by 3.3% [4]. Group 2: Growth Drivers - The anticipated growth in sales is attributed to improved customer contract signing trends, enhanced digital presence, and increased investments in sales resources [2]. - A balanced mix of onsite and offsite services, along with market share gains across various product categories, is expected to contribute to the sales uptick [2]. - Daily sales growth for contract and non-contract customers was 12% and 4%, respectively, with eBusiness sales increasing by 14% in May [4]. Group 3: Margin and Cost Management - Fastenal's bottom line is projected to improve due to active cost control measures aimed at countering cost inflation, including warehouse automation and increased delivery efficiency [6]. - Despite facing elevated occupancy and employee-related expenses, the company is expected to achieve a 12% growth in EPS driven by sales growth and margin expansion initiatives [7]. - Total operating expenses as a percentage of net sales are expected to contract by 60 basis points to 24.3% for the upcoming quarter [8]. Group 4: Earnings Prediction - The Zacks model predicts an earnings beat for Fastenal, supported by a positive Earnings ESP of +3.05% and a Zacks Rank of 3 (Hold) [9][10].

Group 1 - Fastenal is predicted to post quarterly earnings of $0.28 per share, reflecting a 12% increase year-over-year, with revenues forecasted at $2.06 billion, representing a 7.6% increase [1] - Over the past 30 days, the consensus EPS estimate has been adjusted upward by 1.2%, indicating a reassessment of initial projections by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3] Group 2 - Analysts expect 'Business days' to remain at 64 days, unchanged from the previous year [4] - The consensus estimate for 'Daily sales' is $32.12, up from $29.90 a year ago, while 'Weighted FASTBin/FASTVend signings (MEUs)' are expected to reach 7,615, compared to 7,188 in the same quarter last year [5] - The forecast for 'Weighted FASTBin/FASTVend installations (MEUs; end of period)' is 133,889, an increase from 119,306 reported in the same quarter last year [6] Group 3 - Fastenal shares have changed by +0.3% in the past month, contrasting with the Zacks S&P 500 composite's +3.9% movement, indicating that FAST is expected to closely follow overall market performance [6]