Core Insights - Fastenal Company reported fourth-quarter 2025 results that met Zacks Consensus Estimates for both earnings and revenues, driven by steady contract customer momentum and improved operating leverage, although margin pressures and cautious investor sentiment led to a 5.4% decline in stock price in pre-market trading [1] Financial Performance - Fastenal's earnings per share (EPS) for Q4 was 26 cents, matching the Zacks Consensus Estimate and reflecting a 12.2% increase from 23 cents in the same quarter last year. Net income rose to $294.1 million from $262.1 million year-over-year [2] - Quarterly net sales reached $2.03 billion, aligning with Zacks Consensus Estimates and showing an 11.1% year-over-year increase. Average daily sales also increased by 11.1% to $32.2 million, supported by higher unit volumes and a favorable pricing contribution of approximately 310–340 basis points [3] Margin Trends - Gross profit amounted to $898.7 million, a 9.8% year-over-year increase, while gross margin decreased by 50 basis points to 44.3%, attributed to timing-related costs and lower supplier rebates [4] - Selling, general and administrative expenses improved to 25.4% of sales from 25.9% a year ago, leading to an operating profit of $384.3 million and a slight increase in operating margin to 19% from 18.9% [5] Segment & Customer Highlights - Fastenal experienced broad-based growth across product categories, particularly in manufacturing customers, with direct products achieving daily sales growth of 13.1% year-over-year, accounting for 38.4% of net sales [6] - Manufacturing remained the primary growth driver, with heavy manufacturing sales increasing by 12.6% year-over-year, contributing 42.9% of total sales [7] Digital Channels - Fastenal's digital channels saw significant growth, with sales through FMI technology rising 16.6% year-over-year, representing 46.1% of net sales. eBusiness sales grew 6.3%, accounting for 29.6% of total sales, indicating a continued shift towards technology-enabled distribution [8] Annual Highlights - For the full year 2025, Fastenal reported net sales of $8.20 billion, an 8.7% increase year-over-year, with EPS rising 9.2% to $1.09. Gross margin slightly decreased to 45.0%, while operating margin improved to 20.2% [10][11] Balance Sheet & Capital Allocation - At the end of 2025, Fastenal had $276.8 million in cash and cash equivalents, with long-term debt reduced to $100 million. Total liquidity remained strong, supported by operating cash flow of $368.1 million for the quarter [12] - The company returned $252.6 million to shareholders through dividends during the quarter, with no share repurchases made in 2025 [13] Outlook & Commentary - Management expressed confidence in long-term growth drivers, including contract customer wins and digital expansion, while anticipating higher capital spending in 2026 to enhance distribution capacity and technology investments [14]