Fastenal Posts Q1 Gains Amidst Margin Challenges
Fastenal on Monday reported another double-digit increase in quarterly sales, but its gross margin slipped in the first quarter of the year.
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Fastenal reported a double digit increase in quarterly sales for the first quarter of 2026.
Net sales for the company rose 12.4% to $34.9 million per day. It marked the third consecutive quarter of double-digit daily sales growth for the company.
“Now what is important is where this came from,” said Jeff Watts, president and chief sales officer. “The industrial economy remains somewhat challenging.”
He pointed to U.S. manufacturing PMI averaging about 52.6 as an improvement but “still moderate overall,” and emphasized that Fastenal’s results reflected execution rather than a broad macro tailwind.
“We won new business with key accounts, we expanded customer site presence, and we strengthened our value-added services and solutions,” Watts said, noting that Fastenal added healthy number of new national account contracts in the quarter and is on track for a goal of roughly 250 new signings in 2026.
Heavy manufacturing represented 44% of total sales, and average daily sales growth in that segment was near the mid-teens.
Specifically, the company reported that direct materials slightly outpaced indirect materials, reflecting greater contribution from fastener sales and continued strength with manufacturing customers.
Marking a strong turnaround with 17% growth was Fastenal’s construction-related sales.
Chief Financial Officer Max Tunnicliff said this increase was widespread with both larger national contractors and regional firms benefiting, particularly in markets with infrastructure and commercial development.
He also cited improving demand across other non-manufacturing end markets including transportation, warehousing, data centers, and industrial services.
The company’s quarterly gross profit of $982.9 million was an 11.2% increase year-over-year.
However, Tunnicliff said gross profit as a percentage of net sales dipped 40 basis points below its internal gross margin target as pricing actions did not keep up with cost increases.
Totals decreased to 44.6% in Q1 2026 from 45.1% in Q1 2025, driven primarily by unfavorable price/cost and smaller headwinds from transportation and certain customer rebates.
Tunnicliff noted that tariff-related costs moved through the income statement faster than the company’s price increases.
“Our fastener expansion project benefits continued to provide a meaningful offset, mitigating some underlying gross margin pressure,” Tunnicliff said, noting that the benefits will anniversary early in the second quarter of 2026.
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