Fastenal finished 2025 with record annual sales and double-digit fourth-quarter growth, leaning on large contract customers and deeper integration of its inventory-management technology even as executives described industrial demand as uneven and pricing dynamics more complex.
The Winona, Minnesota-based distributor of industrial and construction supplies, said full-year sales rose 8.7% to $8.20 billion, up from $7.55 billion in 2024. Net income increased 9.4% to $1.26 billion, compared with $1.15 billion a year earlier.
In the fourth quarter, Fastenal reported sales of $2.03 billion, an 11.1% increase from $1.82 billion a year earlier. Quarterly net income rose 12.2% to $294.1 million, up from $262.1 million in the prior-year period.
“Fastenal delivered a strong fourth quarter capping an impressive 2025 recovery,” President and Chief Sales Officer Jeffery Watts said on the company’s earnings call. “We achieved double-digit growth in Q4 with daily sales up just over 11%, and we continue to gain market share despite a sluggish industrial economy.”
Fastenal’s strategy is increasingly centered on higher-spend customer locations tied to national, global and government contracts, even as the number of smaller sites declines.
“The strategy deliberately emphasizes key account growth and driving deeper engagement at large accounts with significant spend potential rather than chasing low-volume transactional business,” Watts said.
During the fourth quarter, the number of active customer sites spending $50,000 or more per month increased 14% year over year, while sites spending $10,000 or more per month rose about 8%. By contrast, sites spending less than $5,000 per month declined, with management noting that most of the reduction came from customers spending under $500 per month.
“These figures demonstrate that we’re growing with our largest and most strategic customers, exactly what we’re focusing our efforts on,” Watts said.
A central pillar of Fastenal’s growth is its Fastenal Managed Inventory, or FMI, platform — a combination of vending machines, bin systems and software that automates replenishment at customer sites.
In 2025, Fastenal signed about 25,900 weighted FMI devices, lifting its installed base 7.6% year over year to 136,600 units. In the fourth quarter, 46.1% of sales flowed through FMI devices, up from 43.9% a year earlier.
“Nearly half of our Q4 sales were transacted through FMI technology or other digital channels,” Watts said. “This is a key competitive advantage for Fastenal. It makes us stickier with our customers and more operationally efficient.”
Fastenal’s broader digital footprint also includes e-business tools such as EDI integrations and its ecommerce platform. E-business sales grew 6.4% year over year in the quarter and represented 29.6% of sales. Combined, FMI and e-business accounted for 62.1% of fourth-quarter revenue.
“The more we integrate with customers through on-site and digital solutions, the more indispensable we become,” Watts said.
Chief financial officer Max Tunnicliff, delivering his first earnings call after joining the company in November, described a challenging external backdrop.
“U.S. PMI and industrial production remained mixed in Q4,” Tunnicliff said. “PMI averaged in the low 48s for the quarter, while industrial production was close to flat compared to last year.”
Despite that environment, Fastenal’s sales to manufacturing customers outpaced broader industrial indicators, led by growth with large accounts.
“We’re winning with big manufacturers because of our service model, including the FMI technology and on-site service and our extensive product range,” Watts said.
“Our approach remained disciplined and responsive to the market,” Tunnicliff said. “These actions were designed to offset higher input costs, which they did, while remaining competitive in a challenging environment.”
Gross margin declined in the quarter, which management attributed to timing-related factors, including inventory cost flows and supplier rebate timing.
“These effects do not indicate a change in our underlying cost structure,” Tunnicliff said, adding that supplier rebates were the larger driver of the year-over-year decline and should normalize.
CEO Daniel Florness said tariff-related pricing has been easier to manage in fasteners than in some non-fastener categories where branded suppliers control pricing.
“With fasteners, we are sourcing from the ultimate manufacturers, and it gives us a tremendous amount of visibility,” Florness said. “In the non-fasteners, there’s a big piece where we don’t have that same visibility.”
To manage those pressures, he said Fastenal is pushing back on supplier increases its views as unsupported, having direct conversations with customers and encouraging product substitution when pricing cannot be justified.
“We’re controlling what we can control — pricing, costs, capital allocation — to deliver more profitable growth,” Watts said.
Looking ahead, Fastenal plans to increase investment. Capital expenditure totaled about $230 million in 2025, or 2.8% of sales, and are expected to rise to 3.5% of net sales in 2026.
“These investments are designed to drive efficiency, scalability and customer value,” Tunnicliff said.
While Fastenal avoided issuing formal guidance, executives repeatedly pointed to strong momentum entering 2026, supported by large-account growth and expanding FMI adoption.
“We have our traction now, and we feel really good about momentum coming into the new year,” Florness said. “It’s all about increasing our sales effectiveness, enhancing our service and expanding our market reach.”
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