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Fastenal (FAST -5%) is losing some speed today following its Q1 report this morning. EPS grew a healthy 13.6% yr/yr to $0.30, but that was just in-line. Revenue rose 12.4% yr/yr to $2.20 bln, which was also in-line but marked the company's strongest yr/yr growth since 3Q22.

• Revenue growth was driven by 12.4% daily sales growth and a third consecutive quarter of double-digit gains. EPS grew 13.6% yr/yr to $0.30, landing in-line with expectations.
• Growth was supported by a 350 bps tailwind from higher selling prices and a 60 bps benefit from foreign exchange, compared to a 50 bps headwind last year.
• Fastenal continued gaining share despite a still-moderate industrial backdrop, with U.S. manufacturing PMI averaging around 52.6 in Q1.
• Large customer momentum remained strong, with $50K+ monthly spend sites rising 16.3% yr/yr to over 2,900 locations and generating 21% revenue growth, now accounting for just over half of total sales.
• International sales were a bright spot, with March growth of nearly 24%, led by Europe and Asia.
• Gross margin slipped to 44.6% from 45.1% yr/yr, pressured by ~50 bps of unfavorable price/cost dynamics along with transportation and rebate headwinds.

Briefing.com Analyst Insight:

Fastenal delivered a solid quarter with healthy growth metrics, but the results lacked upside catalysts. While the company continues to execute well—gaining market share, expanding large customer relationships, and growing internationally—some of the top-line strength was aided by pricing actions and favorable FX, which tempers the underlying demand narrative. Margin pressure tied to customer mix and cost dynamics also remains a modest concern. More importantly, investors were likely hoping for a more upbeat read on the industrial and manufacturing environment. Without that, and given the in-line results, the reaction reflects some disappointment despite otherwise respectable performance.