Fastenal CEO on Soft Pricing, Tariffs, and Supply Chain Diversification

Soft Pricing and Investor Sentiment

• 💡 Analysts observed weaker-than-expected pricing in the third quarter, marking the second consecutive quarter of softness.
• 📉 This softer pricing, coupled with high stock valuations, contributed to the company's stock decline.
• 📈 Despite the pullback, Fastenal has shown strong year-to-date performance, outperforming the S&P 500 and comparable industrial stocks.

Pricing Strategy and Customer Relations

• 🎯 Fastenal aims to raise prices only to offset costs, believing excessive increases could impair growth.
• 💬 While customers always push back on price increases, Fastenal engages in conversations to find alternatives, sometimes settling for smaller increases.
• 🚀 The company plans to implement further price increases in Q4 and into 2026.

Impact of Tariffs on Pricing

• ⚠️ Tariffs have been a factor since early Q1/Q2, with pricing teams providing monthly updates on their impact.
• 📊 Fastenal has been actively adding prices throughout the year in response to tariff pressures.
• 🌍 The company is mitigating tariff impacts by diversifying its supply chain and shifting sourcing locations.

Supply Chain Diversification Strategies

• 🗺️ Fastenal has been actively moving its supply chain since 2017-2018 to diversify beyond mainland China and Taiwan.
• 🌏 Sourcing teams are now located in Shanghai, Bangkok, and northern India, with increased presence in North America.
• 🚢 Supply chains traditionally entering the US West Coast are being rerouted to Canada and Mexico to bypass tariffs, despite higher breakdown costs in Asia.