Fastenal Company (NASDAQ:FAST) topped revenue expectations in its first-quarter report Monday, but margin pressure and tariff headwinds pushed the stock lower in early market reaction.
Sales Rise, Margins Mixed
The industrial and construction supplies distributor posted net sales of $2.20 billion, up 12.4% year-over-year and ahead of the $2.199 billion estimate.
GAAP diluted earnings per share were 30 cents, up from 26 cents and in line with expectations, while net income rose 13.8% to $339.8 million.
Operating income increased 13.6% to $447.6 million, with operating margin expanding to 20.3% from 20.1% on operating leverage and cost discipline.
Gross margin declined to 44.6% from 45.1% due to unfavorable price and cost dynamics. Transportation costs, rebate headwinds, and a shift in customer mix also weighed on margins.
These pressures were partially offset by benefits from the company’s fastener expansion project. SG&A improved to 24.3% of sales from 25.0%.