Leaders of industrial and construction supplies distributor Fastenal Co. say recent price hikes on many of the company’s products in response to steel and China-focused tariffs will add 3% to 4% to the company’s top line this quarter and added that that figure could double in the second half of the year.
Speaking to analysts on April 11 after Minnesota-based Fastenal reported its first-quarter results, CFO Holden Lewis said the recent price increases were put in place after several months of conversations with customers about what was happening to Fastenal’s supply chain as tariffs began to be applied—including to screws, bolts and rivets (fasteners in industry speak), one of its main product lines.
The pricing moves by Fastenal, one of the first industrial companies to report its Q1 numbers and outlook, are in line with what many executive teams are doing or plan to do: A recent surveys of business leaders in several industries by Endeavor Business Intelligence showed that more than half plan to pass along to customers a majority of their tariff-related cost increases—which many said will be 15% or more.
On their conference call, Lewis—who will step down from his role this week—and Fastenal CEO Dan Florness said they’ve also looked to manage the impact of tariffs in a few other ways. Among them:
- Fastenal in the first quarter pulled ahead some purchases that had been scheduled for later this year, which contributed to inventory growth of 11.9% that also will feed expected customer growth.
- Continuing a push precipitated by the COVID-19 supply-chain disruptions, Fastenal is diversifying its base of suppliers, with Florness saying about his team’s sourcing strategy: “We don’t just play whack-a-mole and try to avoid a problem. We try to improve the supply chain in every step we take.”
- Fastenal has started shipping products directly to customers in Canada and Mexico that it would have previously brought to the United States. That strategy covers a lot of business: Fastenal gets about 15% of its revenues from the U.S.’ two largest neighbors. “While it might be more expensive to bring it directly into that market from a logistics perspective, it’s a lot less expensive than a tariff that gets layered on top,” Florness said.
Customers are generally taking the company’s approach in stride. Talking about the customer expo they hosted last week in Nashville, Lewis and Florness said tariffs surfaced during conversations but not very often. And when it did, many customers were focused on the practical.
“Where the dialogue went […] was much more about, ‘Show me the math so I can understand what’s happening and then don’t shut me down,’” Lewis said. “That seemed to be the mindset of our partners and customers.”
Those customers, Florness said, have turned more cautious in recent weeks after showing “steady improvement” since November’s election. But, he added, they did not in a meaningful way pre-buy product ahead of the imposition of tariffs. Instead, demand generally remains sluggish and reflective of a manufacturing sector that hasn’t been able to break out of the doldrums of the past two years and change.
In the three months that ended March 31, Fastenal booked a net profit of $299 million on sales of $1.96 billion compared to $298 million and $1.90 billion, respectively, in the same period of 2024. The company’s daily sales rose 5.0% year over year while operating profits ticked up nearly 1% to $394 million.
Shares of Fastenal (Ticker: FAST) rose more than 6% to $80.64 after its earnings report. In afternoon trading April 14, they were changing hands at $81.36. They are up about 6% over the past six months, giving the company a market value of nearly $47 billion.
