Fastenal Company

Greetings and welcome to the Fastenal 2026 Q1 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to our host, Dre Schreiber. Dre, thank you. You may begin.

Welcome to the Fastenal Company 2026 First Quarter Earnings Conference Call. This call will be hosted by Dan Flourness, our Chief Executive Officer, Jeff Watts, our President and Chief Sales Officer, and Max Tunnicliffe, our Chief Financial Officer. This call will last for up to one hour and will start with a general overview of our quarterly results and operations with the remainder of the time being open for questions and answers. Today's conference call is a proprietary Fastenal presentation and is being recorded by Fastenal. No recording, reproduction, transmission, or distribution of today's call is permitted without Fastenal's consent. This call is being audio simulcast on the internet via the Fastenal Investor Relations homepage, investor.fastenal.com. A replay of the webcast will be available on the website until June 1, 2026 at midnight central time. As a reminder, today's conference call may include statements regarding the company's future plans and prospects. These statements are based on our current expectations and we undertake no duty to update them. It is important to note that the company actual results may differ materially from those anticipated. Factors that could cause actual results to differ from anticipated results are contained in the company's latest earnings release and periodic filings with the Securities and Exchange Commission, and we encourage you to review those factors carefully. I would now like to turn the call over to Mr. Jeff Watts.

Good morning, everyone. Welcome to Fastenal's first quarter 2026 earnings call. I'm Jeff Watts, present Chief Sales Officer and Before diving into the results, I want to take a moment to thank our entire Fastenal Blue team across the world for their exceptional work driving the strong performance you're going to hear about today. I also want to highlight a real success that just happened. It was our recent customer expo where we host over 3,000 customers from around the globe. And the turnout and engagement, it was just outstanding. We showcased our latest solutions, FMI technology and digital tools. But what really made it successful was the quality of conversations and the strategic partnerships that were being formed and that were being strengthened. Events like these really demonstrate why we keep gaining market share. We help customers improve their efficiency. We help them improve their productivity, all becoming a trusted partner. Overall, like I said, it was just a great event and one of our best ones yet. So moving into the quarter, slide three. Q1 was a very strong quarter and a great start to the year. We delivered 12.4% daily sales growth, our third consecutive quarter of double-digit growth. Now what's important is where this came from. The industrial economy remains somewhat challenging with a US manufacturer PMI averaging around 52.6, which is an improvement, but still moderate overall. We really didn't see much of a tailwind. We gained share through focused execution. Largely we won new business with key accounts. We expanded customer site presence and we strengthened our value added services and solutions. This performance was really powered by our three strategic drivers. The first being increasing sales effectiveness. We're winning with key accounts and new contracts. We added a healthy number of new national account contracts in the quarter, keeping us on track for a goal of roughly 250 new signings this year. Our total contract count grew by almost 8% year-over-year to just over 3,600 contracts, and about 75% of our Q1 sales came from these customers, which today we're deeply embedded with. When we look at our customer site spending $50K plus per month, They increased 16.3% year over year to just over 2,900 sites. At 21% revenue growth, these sites now account for just over half our total sales. Our approach to enhancing our services is aligned with our strategic commitment to addressing the specific needs of our larger customers, rather than just focusing on a one size fits all approach. By focusing more on our 10K to 50K plus sites, it enables us to have greater direct integration within their facilities deeper insights to deliver better solutions to fit their needs. This targeted focus really allows us to implement and develop, deliver more tailored solutions to all of our customers, regardless of their size. Kind of think of it like a trickle-down effect. Smaller customers may not need all of our solutions, but will be able to take advantage of the pieces where and when they need them. The impact of this approach can really be seen in our average monthly sales per our 50k plus sites. Not only are we adding new sites, but we're selling more of them as we increase the average monthly sales by 5,700 per site per month. Now, lastly, expanding our markets. As our international sales teams have become increasingly more aligned, their growth continues to accelerate. Now, in March, the international business, primarily Europe and Asia, grew almost 24%. And even though today they're a smaller piece of the pie, this performance is exactly what we want to see as we continue to invest in our global expansion. And after speaking with just so many customers last week from different parts of the world, one thing is very clear. Our solutions, our local presence, and our supply chains are definitely in high demand, and it's really why our growth internationally is so important to our future. So tying this all together financially, our daily sales increased 12.4% to 34.9 million per day for the quarter, and our operating margin improved to 20.3%, up 20 basis points from last year. That improvement was primarily the result of strong leverage of the SG&A expenses, which I believe reflects our disciplined approach to managing costs, even as we continue to invest in our strategic growth drivers. Now moving on to slide four. In the first quarter, our digital initiatives continue to gain momentum with our digital footprint daily sales up 13.6%, outpacing overall company growth. As a result, digital channels represented 61.5% of the quarter sales and We remain on track to reach our digital mix goals by the end of the year. We also accelerated the deployment of our FMI, or Facile Managed Inventory Technology. In the quarter, we signed close to 7,000 new FMI device agreements, about 110 per day, an 8% increase over last year. This helped expand our active device base by nearly 6% and drove almost 45% of our Q1 sales through FMI, which is up 150 base points over last year. In short, more customers are using our on-site devices and solutions to manage inventory, which makes Fastenal a stickier and more efficient supply chain partner. Meanwhile, our e-business grew daily sales nicely, up almost 7% over last year. Electronic transactions account for close to 30% of our total sales, and we do anticipate digital adoption to continue to rise as more and more customers integrate their procurement systems with Fastenal. Now our investments in technology are delivering measurable results. By expanding our digital footprint through FMI and e-commerce, we're winning new business and we're driving profitable growth. Now I think our priorities here are very clear. We continue to invest in tools and technology and analytics to drive operational excellence and deepen our customer relationships. The strength of our first quarter reflects our strategic focus. We're winning with large strategic customers We're embedding ourselves deeper through technology and service and doing it financial discipline that drives both top-line growth and bottom-line leverage. With that, I'll turn the call over to Max, who will walk through the financials in more detail. Max? Thank you, Jeff, and good morning, everyone.