Conferencia de resultados del tercer trimestre fiscal de 2026 de Fastenal (FAST): las ventas aumentan un 15.5%, el margen se expande

Fastenal (NASDAQ: FAST) informó de un crecimiento acelerado y un mayor apalancamiento operativo en el tercer trimestre fiscal de 2026. La dirección atribuyó el rendimiento principalmente a las ganancias de cuota de mercado, a la adjudicación de nuevos contratos y a una mayor penetración en las grandes cuentas de clientes.

Puntos clave

• Las ventas netas aumentaron un 15,5% interanual hasta los 2.460 millones de dólares, mientras que el beneficio operativo y el beneficio por acción crecieron aproximadamente un 20%.
• El margen operativo se amplió en 90 puntos básicos hasta el 21,5%, ya que el apalancamiento de 130 puntos básicos en gastos generales, de venta y administrativos (SG&A) compensó con creces la caída de 40 puntos básicos en el margen bruto.
• Los clientes bajo contrato representaron más del 76% de las ventas, y las ventas diarias a estos clientes aumentaron un 18,8%. Las instalaciones con un gasto mensual de al menos 50.000 dólares aumentaron casi un 19% hasta situarse en unas 3.300.
• La presencia digital de Fastenal alcanzó el 61,4% de las ventas. Las ventas digitales diarias crecieron aproximadamente un 16%, mientras que las ventas de FASTBin y FASTVend aumentaron en torno a un 18%.
• El rendimiento del capital invertido alcanzó el 32,5%, con un aumento de 230 puntos básicos. El flujo de caja operativo sumó aproximadamente 422 millones de dólares, equivalente al 105% del beneficio neto.
• La directiva señaló que los centros de datos representaron entre 4 y 5 puntos porcentuales del crecimiento, abarcando a contratistas de construcción y fabricantes que respaldan el desarrollo de centros de datos.

Datos financieros clave

El margen bruto enfrentó un viento en contra de aproximadamente 50 puntos básicos debido al mix de clientes y de 30 puntos básicos por la dinámica de precio-coste. Los ahorros por aprovisionamiento directo, los rappels de proveedores y las devoluciones de aranceles sumaron unos 40 puntos básicos, aunque la dirección identificó aproximadamente 20 puntos básicos como beneficios temporales que no deberían incluirse en la tasa de ejecución recurrente.

El apalancamiento de gastos SG&A se debió principalmente a la productividad laboral y a las eficiencias de ocupación. Los costes de personal mejoraron en 90 puntos básicos como porcentaje de las ventas, mientras que la plantilla total equivalente a tiempo completo aumentó menos del 1%. Los costes de ocupación mejoraron aproximadamente 50 puntos básicos.

Rendimiento empresarial y operativo

El número de contratos de Fastenal aumentó un 6,4%, con nuevas firmas orientadas principalmente hacia cuentas nacionales multilocalización. Las ventas de instalaciones de clientes con un gasto mensual de al menos 50.000 dólares crecieron aproximadamente un 28%.

La manufactura pesada representó aproximadamente el 45% de las ventas y registró un crecimiento de las ventas diarias de alrededor del 20%. El crecimiento fue más destacado en cuentas clave, productos mecanizados, sector aeroespacial y equipos industriales. Resto de manufactura creció aproximadamente un 13%, mientras que la construcción no residencial se benefició de la actividad de infraestructuras, eléctrica y de servicios públicos.

Las ventas de materiales directos aumentaron aproximadamente un 19%, en comparación con el crecimiento de cerca del 14% en materiales indirectos. La directiva vinculó esta diferencia a una mayor producción de los clientes, la consecución de grandes clientes, la mejor disponibilidad de producto y las acciones de fijación de precios.

Los precios aportaron aproximadamente 2,4 puntos porcentuales al crecimiento trimestral. La dirección señaló que esta contribución se ha desacelerado a medida que Fastenal absorbe el efecto comparativo de las medidas de precios implementadas entre finales de 2025 y principios de 2026.

Fastenal firmó aproximadamente 7.500 dispositivos FMI ponderados durante el trimestre, o 117 al día frente a los 110 al día de un año antes. La base instalada superó las 143.000 unidades, un 7% más.

La empresa también abordó una pequeña adquisición relacionada con IA destinada a mejorar la coordinación de sus capacidades tecnológicas y de IA. La directiva calificó la transacción como pequeña pero estratégicamente útil para acelerar el desarrollo tecnológico.

Previsiones de la dirección

Fastenal mantuvo su previsión de gasto de capital neto para 2026 de 310 millones a 330 millones de dólares. Las inversiones planificadas incluyen capacidad en centros logísticos, equipos de FMI y automatización, tecnologías de la información y activos de transporte.

La empresa también sigue previendo entre 27.000 y 29.000 instalaciones de dispositivos FMI ponderados para todo el año.

La directiva indicó que volver a la neutralidad de precio-coste sigue siendo un objetivo. Consideró razonable un posible retorno a la neutralidad en torno al primer trimestre fiscal de 2027, aunque enfatizó que los precios de proveedores, los costes de combustible y otras variables de inflación hacen que el calendario sea incierto.

Para los periodos de crecimiento de las ventas a doble dígito, la dirección sigue considerando los márgenes operativos incrementales en el rango medio del 20% o superior como un marco interno adecuado, no como una previsión formal.

Riesgos y aspectos a vigilar

• Los grandes clientes suelen aportar márgenes brutos más bajos, lo que genera un viento en contra anual previsto por mix de clientes de aproximadamente 50 a 60 puntos básicos. La directiva afirmó que los mayores volúmenes y unos modelos de servicio más eficientes aún pueden respaldar márgenes operativos atractivos.
• La relación precio-coste siguió siendo un viento en contra de 30 puntos básicos para el margen bruto, aunque mejoró en aproximadamente 10 puntos básicos secuencialmente.
• Aproximadamente 20 puntos básicos de los beneficios del margen bruto del tercer trimestre estuvieron relacionados con el calendario temporal y no se espera que persistan en el mismo nivel.
• La inflación del combustible y el diésel podría afectar a los costes, aunque la directiva señaló que la flota propia de Fastenal y el control de rutas ayudan a mitigar el impacto.
• El crecimiento de las ventas diarias de septiembre se moderó al 14,4%, por debajo de julio y agosto. La dirección lo atribuyó a una moderación desde niveles elevados y al efecto comparativo del ajuste previo de precios, más que a un cambio en la tendencia de fondo de ganancia de cuota.
• La dirección identificó los mercados agrícolas y vinculados a la alimentación como áreas de relativa debilidad económica. El crecimiento de la construcción también se ralentizó tras un sólido segundo trimestre, aunque la empresa siguió describiendo la demanda como saludable.
• Las cuentas por cobrar aumentaron en paralelo al rápido crecimiento en clientes más grandes, los cuales suelen tener plazos de pago más largos.

Puntos destacados del turno de preguntas y respuestas

Perspectivas del margen bruto: La directiva señaló que una caída interanual de aproximadamente 60 puntos básicos representa un punto de referencia recurrente razonable tras excluir los beneficios temporales del tercer trimestre. Para el cuarto trimestre, sin embargo, la comparación incluye un viento en contra temporal de aproximadamente 50 puntos básicos registrado en el cuarto trimestre de 2025, lo que podría compensar en gran medida la presión recurrente del mix de clientes.

Moderación de septiembre: Fastenal afirmó que la tendencia secuencial más suave no indicaba un deterioro en sus ganancias de cuota ni un nuevo problema macroeconómico relevante. Las ventas bajo contrato aún crecieron aproximadamente un 19%, y el crecimiento secuencial de enero a septiembre superó el 18%.

Demanda de centros de datos: La directiva estimó que los centros de datos aportaron entre 4 y 5 puntos porcentuales al crecimiento. Fastenal está utilizando «pods» in situ para ubicar el inventario y las capacidades de servicio más cerca de los proyectos en rápida expansión.

Productividad laboral: La directiva rechazó caracterizar los recientes cambios en la plantilla como recortes de costes. Atribuyó la mejora a la especialización de roles, la automatización, la IA y las herramientas digitales. Un ejemplo fue un proceso de presupuestación impulsado por IA que redujo a unos 15 minutos un trabajo que antes requería cinco o seis días.

Crecimiento al diluirse el efecto precio: La dirección prevé que el impulso del precio disminuya a medida que se absorbe el efecto comparativo de las acciones anteriores. Afirmó que el crecimiento en volumen, la consecución de contratos y las ganancias de cuota de mercado pasarán a ser los motores de crecimiento más importantes.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Greetings. Welcome to Fastenal's 2026 Third Quarter Earnings Results Conference Call. [Operator Instructions] Please note, today's conference is being recorded.

At this time, I'll now turn the conference over to Dray Schreiber. Thank you, Dray, you may begin.

Dray Schreiber

Welcome to the Fastenal Company 2026 third quarter earnings conference call. This call will be hosted by Jeff Watts, our President and Chief Executive Officer; and Max Tunnicliff, our Chief Financial Officer. The call 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 of 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 December 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's 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.

Jeffery Watts

Thank you, Drey. Good morning, everyone, and welcome to Fastenal's third quarter 2026 earnings call. I'm Jeff Watts, Fastenal's Chief Executive Officer, and I appreciate you joining us all today. Also with me this morning is Max Tunnicliff, our Chief Financial Officer.

Before we get into the quarter, I would like to recognize our Blue Team. Every result we report today was earned by people in our branches, our on-sites, our distribution centers, our truck center support teams. They show up every day for our customers. They solve problems, and they keep finding better ways to help our customers run their operations. So the Blue Team, thank you. This was a very strong quarter and one you should all be very proud of.

Now two quick housekeeping items before we get to the numbers. First, our slides look different this quarter. We've refreshed the format of the investor presentation to make the story easier to follow. The flow now goes from highlights to our objectives to what drove sales, financial results and then there are some key takeaways. I want to be clear about what we didn't change. Our definitions are the same, and our historical data is the same. The supporting detail you relied on is all still there, though some of it is simply moved to the appendix. The first page of the appendix shows exactly what moved and where to find it. And second, we're targeting a 45-minute call today. We expect to keep the Q&A portion broadly consistent, take about the same number of questions as usual.

Now onto the quarter. And for me, I think the headline is pretty simple. Sales grew 15.5%, earnings grew faster than sales. Our net sales were $2.46 billion, up $330 million from last year. Operating margin was 21.5%, up 90 basis points, and our return on invested capital reached 32.5%, up 230 basis points. Operating income increased by $90 million from last year. That's the largest year-over-year increase in the single quarter in Fastenal's history. But I think the three things that really stood out to me or stand out to me and drove the quarter. First, growth accelerated. Second, we converted that growth in the higher operating margin and faster earnings growth. And third, the quarter was driven mainly by market share gains through our key account strategy and new contract wins.

Now on to Slide 5, and this really brings us back to our three strategic objectives. Now these are the same pillars we've discussed before in everything we do ties back to them. First, being the increasing sales effectiveness. We're gaining share with larger customers through our key account strategy and new contract wins. And you can see that in our daily sales growth and in the growth of our largest customer sites. On the services, we continue to grow our FMI installed base. FASTBin and FASTVend technology, our digital footprint, now these tools improve the customer experience, they strengthen retention and make both our customers and our own operations much more efficient. And then lastly, expanding our TAM, and we continue to reach revenue that we serve today through new products, new geographies, new business models and new services. You can follow our international and non-Fastenal growth in our monthly sales releases, and really the strategy is consistent. What changes quarter-to-quarter is the evidence in this quarter, I believe the evidence was strong.

Now on to Slide 6 and what really drove our sales. our customer site data continues to show progress with our larger customers, both new and existing, all growing with us. Our contract count increased 6.4% from last year, with signings weighted toward multisite national accounts. The number of sites spending $50,000 or more per month with us grew almost 19% from approximately 2,800 to roughly 3,300, and sales from those sites increased roughly 28%. Contract customers now represent over 76% of sales and their daily sales grew 18.8%. Pricing did contribute for the quarter, approximately 2.4% to growth. That's a slower pace than earlier in the year because the year-over-year pricing contribution peaked between fourth quarter of '25 and first quarter of '26. We're now lapping some of the strongest pricing actions taken in '25. Market conditions did improve in the first half, and that improvement continued in the third quarter, but our growth exceeded the growth rates in the industrial markets that we serve. To me, that's the clear signal that we're taking share.

Now on to Slide 7. Our digital footprint was 61.4% of sales and digital sales grew approximately 16% on a daily basis faster than the company overall. When customers transact digitally, orders are more accurate, there's less manual work on both sides, and the relationship becomes much more integrated. We signed approximately 7,500 weighted FMI devices in the quarter or about 117 per day compared with 110 per day last year. And our installed base passed 143,000 units, up 7% and sales through FASTBin and FASTVend grew approximately 18%. We continue to expect 27,000 to 29,000 weighted device settings for the full year. We really believe that, that opportunity for us is clear. We need to keep moving customers toward technology-enabled replenishment because it improves service, it strengthens the relationship and it creates efficiency for both sides.

Now on to Slide 8, and this is a little different from the past. But from time to time, we'll show you a real example of how we win because I think it tells our story better than any statistic ever could. So today, I want to take a couple of minutes to highlight our customer strategy and action and show how we identify a customer challenge and bring our supply chain capabilities to life. In this example, we had a new customer that's experiencing direct material stock outs, supply chain shortages and limited control over product consumption. As their business grew, those challenges became even more significant. So after we signed the contract, we got to work. Our Lean Six Sigma specialists, they map the process, identified the root cause, which was a manual inconsistent system with limited automation limited digital visibility and physical organization. From there, we continued -- we developed a road map to modernize their supply chain. And once approved, our team moved quickly.

As you can see on Slide 9, we've reorganized their [ Caribbean ] storage areas for the direct materials. We installed clearly labeled barcoded bins, deployed our FMI technology, established planograms and connected to customer [ FAST 360 ] to really provide greater visibility across their facility. We also established KPIs to measure ongoing performance. And the results are significant. Digital visibility increased from 0% to 99%. Replenishment is now automated, stock outs have been eliminated, inventory has been reduced and employees spend less time searching and walking for product. Over time, we expect the solution to generate anywhere between 25% to 30% in overall cost savings. But I do want to emphasize that this is only the beginning. And as we learn more about their operation and deepen the relationship our local teams and industry specialists are going to continue to bring new products, new technology, new systems and saving opportunities to the customer. Now that's the power of our model. Initial investment creates value, that value builds trust and that trust creates opportunities to expand the relationship. Over time, those benefits compound for not only the customer, but for Fastenal as well.

With that, I'll turn it over to Max to walk through the financial results.

Max Tunnicliff

Thank you, Jeff, and good morning, everyone. Overall, this was a very strong quarter. Demand improved. We continued to gain share and management of our expenses helped us turn that growth into higher operating margins and earnings. Sales grew 15.5%, while operating earnings and earnings per share grew roughly 20%. I'll start with the business and market trends on Slide 10. Industrial conditions improved further in the third quarter. U.S. manufacturing PMI averaged nearly 55 and industrial production for our key end markets remained positive. This is consistent with the gradual improvement we've seen since late last year. Although momentum remains stronger in select industrial markets than in the traditional manufacturing and automotive area. Our daily sales grew -- improved to 15.5% from 14.7% in the second quarter. The improvement was driven primarily by new customer wins, greater share of spending with existing customers and improving industrial activity. Customer demand remained healthy overall. What we heard from the field was consistent with our results. Growth opportunities were strongest in data centers and other high-demand markets, while softness remained concentrated in a smaller number of areas. The slide shows how broad the improvement was, heavy manufacturing led the way again. It represented approximately 45% of sales and daily sales grew approximately 20%.

Growth was strongest in key accounts, machine products, aerospace and industrial equipment. Other manufacturing grew approximately [ 13%, ] showing that the improvement extended beyond the largest accounts and strongest verticals. Construction and other nonmanufacturing markets also contributed. Nonresidential construction continued to grow, supported by infrastructure, electrical and utility activity, while transportation and reseller customers also posted solid gains. By material type, direct materials increased approximately 19% compared with approximately 14% in indirect materials. This reflected stronger customer production activity large customer signings, improved product availability and pricing actions. Several higher growth product categories also outpaced the company overall, particularly electrical, tools and other industrial products.

To summarize, industrial activity improved during the quarter, but our growth continued to significantly outpace the market. The common bread was our continued progress with larger customers, reflecting ongoing share gains from our key account strategy, new contract wins and embedded supply solutions.

Turning to the financial results on Slide 11. The key message is that we converted strong sales growth into higher operating margin and earnings. Operating margin increased 90 basis points to 21.5%. As 130 basis points of SG&A leverage more than offset a 40 bps decline in gross margin. Gross margin was approximately 45%, and down 40 basis points from last year but 20 basis points above second quarter. Customer mix remained the primary year-over-year headwind, consistent with our strategy.

Beyond mix, two items weren't discussed this quarter. Price cost, which we will continue to address until we return to neutrality and favorable items that benefited the quarter but may not continue at the same level in the underlying rate. First, customer mix. It's approximately a 50 basis point headwind, reflecting growth with large customers and continued execution of our strategy. This mix pressure reflects the continued success of our larger customer strategy. These customers generally carry lower gross margins, but their higher volumes and more efficient service models support attractive operating margins and incremental operating profit. Price cost was approximately a 30 basis point headwind and improving approximately 10 basis points from the second quarter, marking another quarter of sequential improvement. The year-over-year pricing contribution is slowing after peaking between the fourth quarter of '25 and the first quarter of '26. We will continue to report on price/cost while it remains a headwind, and we remain focused on disciplined pricing and returning to neutrality.

Favorable items added approximately 40 basis points to gross margin, including direct sourcing savings, supplier rebates and tariff refunds. About 20 basis points of this 40 reflect timing across these items and should not be assumed to continue in the underlying gross margin run rate.

SG&A provided 130 basis points of leverage, reflecting expense growth well below sales growth. Employee costs improved by 90 basis points as a percentage of sales, while total full-time equivalent headcount increased less than 1%. This reflects productivity, role specialization and the benefits of technology and automation. Occupancy costs improved by approximately 50 basis points as higher sales were spread across our existing branch, on-site and distribution network. All other SG&A increased slightly as a percent of sales, reflecting continued investment in tech, analytics, supply chain and sales support.

In total, SG&A leverage expanded operating margin by 90 basis points to 21.5%. This demonstrates how we are executing our strategy, using our infrastructure, tech and digital capabilities to scale effectively and efficiently while continuing to invest for growth. Return on invested capital increased 230 basis points to 32.5% on a trailing 12-month basis, comparing that with a 10-year average of approximately 28%. The improvement reflects stronger operating earnings and continued discipline in working capital and capital spending. Overall, the quarter demonstrates that we can grow with larger and more complex customers while continuing to invest in the business and improve operating margins and returns.

Turning to cash flow and capital discipline on Slide 12. Operating cash flow was approximately $422 million, or 105% of net income. The year-over-year in conversion was lower primarily because receivables increased with strong sales growth, particularly with larger customers who generally carry longer payment terms. Inventory increased approximately 3% over the past year, well above the growth in sales, while product availability remained high. That performance reflects more disciplined inventory positioning and better use of the inventory already in our network. Accounts payable increased as purchasing rose to support growth. Free cash flow is approximately $350 million or 87% of net income, providing capacity to fund growth investments and return capital to shareholders.

Third quarter capital spending was approximately $72 million or 2.9% of sales. Spending was directed primarily toward hub and facility capacity, automation, FMI equipment, information technology and transportation assets. For full year '26, we continue to expect net capital spending of $310 million to $330 million. The program includes hub network capacity, FMI and automation equipment, information technology projects and transportation assets. We returned $328 million to shareholders during the quarter, $298 million of which was through dividends and $30 million through share repurchases. Together, that represented nearly 82% of net income. Over the trailing 12 months, we returned approximately $1.2 billion after funding our operating and capital needs. Our approach to capital is unchanged. We invest in the business where we see strong returns, return excess cash to shareholders and keep a conservative balance sheet.

So overall, we delivered strong growth, expanded margins and generated healthy cash flow while continuing to invest for the future. The quarter reflects disciplined execution across the business.

With that, I'll turn it back to Jeff for the key takeaways.

Jeffery Watts

Thanks, Max. Before we open the line, I think I just want to leave everyone with three points. The first, our growth was broad based, reflecting share gains across large accounts and embedded supply solutions. Second, we converted that growth into higher operating margin and earnings, while price cost improved sequentially for the second consecutive quarter. And third, our model is compounding. New customer wins create embedded spend technology deepen those relationships and our scale allows us to grow profitably while continuing to invest. Now this quarter demonstrates the strength of our strategy. We gained share, expanded margins generated strong cash flow and improved returns. And I think I'll close where I started with our people. This business is -- it's always been built on customer and one relationship at a time by a Blue Team that takes ownership, and I'm very excited about where we're headed.

With that, operator, I think we're ready for questions.

Operator

[Operator Instructions] And our first question today comes from the line of David Manthey with Baird.

Preguntas y respuestas

David Manthey

A two-part question on gross margins. First off, number one, the 20 basis points of timing benefits, could you give us your definition of timing? I mean, is that catching up for past accruals? Or is it pulling benefits from fourth quarter back into the third quarter? And then second, if fuel prices stay at current levels, is it possible that the 30 basis point price cost gap actually gets larger in the fourth quarter? Those two questions, please.

Operator

Ladies and gentlemen, please stand by. We're experiencing difficulties. We'll resume momentarily.

[Technical difficulty]

Max Tunnicliff

Dave, you there?

Operator

Ladies and gentlemen, thank you for standing by. Please go ahead, sir.

Max Tunnicliff

Sorry about that, Dave and company. Jeff told me, I got to take accountability because it was me, I hit the wrong button trying to unmute ourselves. So I apologize. It was not a question. Not trying to burn time.

Okay. Dave, two-part question. First of all, you asked about the bps of timing. Let me define that. Part -- just candidly, part of that and roughly half of that was tariff refunds very immaterial, but we don't see that coming through in any material level in Q4. So first of all, the amount of 10 bps in that regard is quite small. And second, just because of the phasing and the type of IEEPA tariffs we paid and the sequence of receiving those, that's going to be probably somewhere in the early part of next year before we see that back in our run rate. The other half is a bit more of a timing element in regards to primarily volume rebates with suppliers. And so we did have to do a little bit of a catch-up on that benefit, knowing that we were going to start to trip into various tiers in the quarter. So that would be that. And that's why we want to talk about a trend that would exclude that from Q4. Fuel levels, yes, this one is an extremely interesting one. And the reason I say that is, first of all, you know our business in that we do a pretty good job offsetting that inflation in our business. It's not generally possible to offset all of it. But the impact on our business is it's real. It's -- I'd say in Q3, very flat-ish to what the impact was in Q2 but versus the first quarter versus last year, it's fairly significant. Now to your point, we see enough traction in our price execution, enough traction in that space. We've seen enough traction in the way that we handle fuel costs to feel comfortable that we're not going to be in a situation in Q4 where the price cost becomes -- widens the gap to answer your question directly. We had a pretty nice exit rate out of Q3, particular to net price cost, which we expect to continue. But I can't make a confident statement like that without suggesting that we all know that these types of elements, inflation direct or indirect regarding fuel, diesel can have a pretty big consequence in our business. And I'll take a moment, too, just to answer and make one more point around fuel that I think is -- it's more structural to Fastenal. So why don't we have to refer to diesel costs and fuel costs as a major impact on our business. And a lot of it just has to do with our captive fleet. We choose our own routes. We were able to put a lot of product that otherwise would need to be small parcel on our own vehicles. And so we're able to structurally mitigate a lot of the impacts of some of this inflation, albeit it still sits in our P&L to some extent.

Operator

The next question is from the line of Steve Volkmann with Jefferies.

Stephen Volkmann

I'm going to switch to the growth side of this and your helpful Slide 21, it's just interesting to me that the September sequential change sort of underperformed normal seasonality based on your chart here, and that's the first time we've seen that for a number of months here. So I'm just curious, I think Max might even have mentioned there were some very limited areas where you saw some weakness or something. I don't want to put words in your mouth. But anything to call out relative to sort of how the quarter progressed and maybe why September was a little bit lower than seasonality?

Jeffery Watts

I'll take that, Max. September still was a strong month at 14.4%, but it was below July and August. We're starting to lap some pricing, but I think I'm more focused on the two-year growth of 27% and more importantly, the January to September sequential growth. And that's over 18%, which is well above our historic trend. And really, I think the most important number is we move into Q4 and more importantly into Q1. I think what also -- when we look at those numbers, especially in September, what gives me a lot of confidence is really what's underneath that headline number. Contract sales grew at 19%. Our large customer sites continue to grow well, and we continue to gain share. I don't think I'd describe -- I think I would describe September as more of a moderation from very strong levels, not so much a change from the strategy of customer activity behind it. I don't know if you want to add anything to that?

Max Tunnicliff

Steve, I'll add on just the point around where in our end markets, are we seeing a bit more of a slower pace. And so even some of our -- what we would call "weakest areas," albeit whether it's resellers, a little bit on the government side is still -- our end markets, we're still performing in the low double digits. A couple notable areas of weakness that we're just sensing more in the economy is more around ag and food, but we don't feel that -- that's clearly to us not an underperformance on our side. It's just part of the economy, and what's happening there. Yes, so as Jeff said, in September and looking ahead, we don't see any change in our underlying share gains, the way that we calculate our impact to what we've called in the past self-help. We also don't see anything yet that would concern us from a macro economy perspective that we haven't already seen in the past couple of quarters. So yes, a little below our sequential trends, but nothing that causes us to change our future perspective on our business.

Operator

The next question is from the line of Tommy Moll with Stephens.

Thomas Moll

I wanted to start maybe to tie up the conversation on gross margin and then pivot to a strategic question as a follow-up. But on gross margin, in 3Q, 40 bps lower year-over-year. If we take away the 20 bps of timing help, that gets us to down 60%, is that the baseline assumption we should work with for Q4, or are there any other crosscurrents that you want to call out for us?

Max Tunnicliff

Yes, Tommy. So you know our business well and that based on our strategy, one of the elements that comes from that strategy is just a consistent mix negative impact on margin, and that's both big customer growth focused, which shows up in leverage, and it's also just where we grow geographically, especially internationally. And so yes, the around 60 bps is a good underlying point on a year-over-year basis to consider. So your question was beyond that known item, what else might we want to consider for Q4? And you can look at it a couple of different ways. One is if you just take the sequential, you don't -- the mix question doesn't impact, and we have a normal sequential pattern. Now we don't provide guidance on a quarterly or annual basis, as you well know, but we do want to and do point out when there's something significant in our run rate. And so aside from the -- if you take a sequential pattern, aside from the 20 bps that I mentioned, there's nothing significant. We've talked about our goal of price/cost neutrality. Of course, delivering that goal would be a sequential benefit. If you flip to a year-over-year basis, same comment. If there's something really big, we would call it out. If you recall, from Q4 of last year, we did talk about a significant amount of timing in our gross margin, and it was a negative 50 basis points, the way we described it last year. So if you're doing a year-over-year comp, you want to take that into account along with the mix. So we'll have a positive tailwind coming from the timing elements from last -- assuming no timing elements in Q4 this year. And then you'll have the offset mix component. And then as you read through our results and looked at our Q3 deeper and deeper, you'll notice also that we have a little bit of benefits in the run rate. Again, it's the 40 bps that we mentioned as a benefit offsetting mix and offsetting price cost, and around half of that was timing, that means 20 bps remain. And so that's the way I'm thinking about both from a sequential perspective and a year-over-year perspective on gross margin. Now I can't -- again, I don't want to escape that answer without saying we don't have the crystal ball everyone wishes we -- everyone had and some of these elements, a lot of our our mix is dynamic or the inflation is dynamic and our pricing conversations are dynamic.

Stephen Volkmann

Understood and appreciate it. And as a follow-up question, I wanted to ask about some press mentions recently of an AI-related acquisition. I don't think it was mentioned in the materials today. And my guess is this is pretty small, but could you just give us any details there, and how -- maybe explain how it ties into your broader strategy?

Max Tunnicliff

Yes. I'll talk maybe just scope it a size, and why it wasn't mentioned publicly, and then I'll give it to Jeff. But First of all, just broadly, when we think about M&A for Fastenal in the near term, we're not -- we don't we don't see a need for anything large. But we've made that clear in the past. But at the same time, we find opportunities and we look for opportunities to improve our capabilities. And oftentimes, those are not going to be large enough to even be disclosable and sometimes not large enough to even speak to on the call, but we look at the ROI on those as being, in some cases, a little bit in a way, limitless. So these are investments, and this is an example of one, and I'll turn it over to Jeff. But yes, small, but we don't -- we wouldn't want our time with something small that we didn't think has a positive coming in the future.

Jeffery Watts

Yes. I think on this acquisition, I mean, we've known this company for quite some time. What they kind of brought us was some orchestration that we needed around our AI and our technology as we move forward. And it was an opportunity that, again, Max was -- it's not maybe as material or maybe more immaterial, but for us as a company, when we see an opportunity like this, obviously, we jumped on it, and it's going to help us grow a lot faster on the tech side.

Operator

Next question is from the line of Ryan Merkel with William Blair.

Ryan Merkel

Nice job on the slide deck.

Jeffery Watts

Thank you, Ryan.

Ryan Merkel

Wanted to ask first on data centers. You mentioned that was a strong market. So I'll leave the kind of open ended. Just curious how you see that impacting demand. And in your answer, maybe talk about the data center pods. Think you're having a lot of success there.

Jeffery Watts

I mean overall, obviously, the data centers are a meaningful contributor to our sales. Right now, internally, we look at about 4% to 5% of our -- 4 to 5 percentage points of our growth. The work really spans the data center that we're seeing the impact we see comes from the construction contractors and the manufacturers supplying the build out. We really serve that through existing customer relationships. But it is difficult to really get a grasp between how much of the data centers is coming out. We should give you a stronger number of part of our growth. But on the pod side, I'll turn that over to Max, he can talk a little bit about that.

Max Tunnicliff

Yes. It's -- just to reiterate what Jeff said, it's -- we want to calculate the impact better than we can, but it's just -- as you know, the fingers are all over the place on data centers, and it's a bit of a tough one to call on the impact, but it is -- it's big enough to call out. Yes, the pods are more of a -- if I get your question, just more of an approach on how we're innovating on thinking about how to service data centers and in a way, I guess I think of it this way is -- and I haven't heard this internally, so I could -- hopefully, I'm not off, but it's more like it's setting up shop almost like an on-site and being as close to the customer as possible, which is always our strategy. It's our winning strategy we've had. And so the teams innovated and found a way to service these growing customers in the best possible way.

Jeffery Watts

I think for us, it's a way to try to keep up with the demand because it's coming so fast, that having that on-site, that pod on site, it's just helping us keep up with the day-to-day demand, which is sometimes pretty overwhelming the speed in which they need the product.

Ryan Merkel

Got it. All right. No, that's helpful. And then second question is just on price cost. Just curious what you think that looks like in 4Q I think I heard you say the exit rate was better coming out of 3Q? And do you expect to be back to neutral in maybe 1Q of '27? I know it's a bit of a moving target, maybe suppliers are raising prices, but just what are your thoughts?

Jeffery Watts

Yes, you're exactly right. It's a moving target. But I wouldn't dispute, our goal is as quickly as possible as it always has been. And fortunately, we are making progress. But I think the way you articulated it, Ryan, feels very reasonable to me.

Operator

Our next question is from the line of Christine Yao with Morgan Stanley.

Tingbing Yao

One thing that stood out in the September print was the divergence between, I guess, heavy manufacturing, which continues to grow north of 20% on average for 3Q and non-resi construction, which slowed quarter-over-quarter. Can you help us unpack what's driving that divergence? For example, is this something spec specific to certain projects or customer types, or are you seeing a broader change in activity?

Jeffery Watts

Yes. I wouldn't say that there was a big slowdown in construction by any means. And construction, it can move around with project timing. Growth did slow from a very strong Q2, but it still remains healthy. And year-to-date, our construction fastener growth remained extremely healthy. We're watching it, but I don't know if we're seeing anything that changes our broader view on the construction side. The manufacturing side, yes, continues to do very well, very strong demand there. So yes, on the construction, I don't think we have anything that would change our broader view.

Tingbing Yao

Got it. That's very helpful. And September came in below typical seasonality. And I wonder, was there anything unusual in customer ordering patterns during the quarter that helped explain the softer exit rate?

Max Tunnicliff

No. Kind of like what I said earlier. I mean if you really look at the numbers, the last months previous to September. We outgrew our historic rate personally. We're lapping some pricing from last year. We don't really see anything out of the ordinary as far as demand goes, especially on the manufacturing side. I just think we have a very good sequential trend January through September, and I wouldn't read too much into it.

Operator

The next question is from the line of Ken Newman with KeyBanc Capital Markets.

Unknown Analyst

This is Zack on for Ken. Just two quick ones. So the comps get tougher heading into next year. First, is it fair to assume like a mid- to high single-digit growth? And then if that is a fair scenario, what should incrementals look like for FAST?

Max Tunnicliff

Yes, Zack, I'll take the start on this, and then Jeff can add in if he'd like. It's a bit of a -- it's a forecasting kind of guidance question. And I'll just -- I'll give a couple of points of color. One that you want to keep in mind is just that we are -- as we approach next year, the pricing tailwind, if you will, of course, will slow a little bit. And the way that we look at our business, as we focus a lot of our gauge of our success on the share gains. And so just as we responded to September, we monitor that. And so we we see a consistent share gain pattern ahead of us based on our potential and what we're driving. And so then the rest is -- and we would assume less pricing. And so then the market dictates the rest of our performance. And so without giving you the figures, yes, that's probably going to -- I mean we expect -- our success, we think, in any environment should be 10 percentage point top line improvement each and every year. That's what we hold ourselves accountable for internally, but that's not a forecast or guidance either. So hopefully, that helps put a little context there. And then you asked about incrementals, I think, so on the incremental operating margin level, we continue to believe that our business, when we're growing double digits should be in the mid-20s, if not higher. And that's what we go ourselves to achieve. And so that, if you will, not guidance, but if that -- what we said consistently in the past holds, and I think it's proving itself out this quarter, even If you take out the onetime events, we're in that mid-20% range. And that's where we expect to be. That's the healthy point of our growing -- our fast-growing businesses to be in the mid-20s.

Jeffery Watts

Yes. I would just add, as pricing rolls over, what really replaces it for us is it's volume and share. I mean price it did help this quarter, but I think the bigger story for us is our contract growth, our customer site expansion, a lot of the newer wins and deeper penetration. As we anniversary maybe some of that pricing our reported growth is going to grow naturally less help, I guess, from price, and I guess that's the math. But it doesn't really change the underlying customer activity that we see.

Max Tunnicliff

And even said -- just to illustrate what Jeff just said it, if we just used pricing as a barometer looking ahead through the year we're walking through there would be an expectation that we would have slowed down, and so we have picked that up with share gains. And of course, the market has helped, not significant, but it's helped even sequentially. So Hard to tell on the future on that piece, but we're going to keep driving for the largest growth, obviously, a percentage that we can do and with the right incremental margins.

Jeffery Watts

Our sequentials are strong.

Operator

Our next question is in the line of Chris Dankert with D.A. Davidson.

Christopher Dankert

I hope we could focus in a little bit here on SG&A, impressive leverage in the quarter. I guess, hard not to note is that sales force headcount is down over 400 heads versus where we were in June. Can you just kind of put that in context? Is this -- are there additional cuts planned? Is this just kind of a good hygiene reset? Maybe just kind of give us an update on heads there.

Max Tunnicliff

Yes, Chris, I'll take that to start. First, I wouldn't -- I definitely wouldn't use the term cut because our business is a growth business. And we are -- there's no CFO or CEO sitting here, putting a headcount cap on areas that are important to our business. And so this is really the output of of a lot of the work that the teams have done, not just in months or quarters but years, getting role specialization, putting the work in the right place, automating, using AI and the focus on large customers. And so all of those lead to significant efficiencies. And so I wouldn't even call it a reset, but this is our ability to grow this business with outgrowing headcount nearly as fast using the tools at our disposal.

Jeffery Watts

Yes. I would add that we're not going to starve the business to create a better margin quarter. But just to add in to what Max was saying, a lot of the a lot of the decisions in the field, they're being made in the field. And instead of maybe in the past, before we were kind of getting all the digital tools and all the different things out to the field, that natural reaction would be hey, we landed this account, I need to add 2 or 3 heads. Now that those same managers, they're calling in and say, "Hey, we don't need the 2 or 3 heads. We need this tool. Now that we have this tool, we can do it with hat." And that's really what is becoming. There's definitely no headcount or restriction on adding labor. We're going to add labor to help wherever we need to continue to grow our business.

Christopher Dankert

That's really, really helpful, guys. I guess my surprise is just, I guess, historically, you signed on sites, you add contracts, you require just more labor energy. This seems like a material change. I guess -- is there a specific tool in particular to help you guys lever because it's a marked departure it feels like?

Jeffery Watts

I mean, I can -- I mean there's a number of tools, but a few years back when I was traveling to branches, is looking at how we were quoting business. And it upset me because honestly, it was the same way I quoted business 30 years ago when I was in a branch in at the time of 2024. That can't exist. So a lot of the new tools we've got in instead of taking maybe 5, 6 days of sourcing and quoting that same tool now using AI and some of our internal technology, it may take 15 minutes. I mean that time savings alone. That's just one example, but we really looked at the branch efficiencies first when we're developing the tools and then we kind of went from there up, and it's having a real impact in the field and on our head count.

I know we started a little late. So we'll add one more question. I think we have time for one more question.

Operator

The question will be coming from the line of Guy Hardwick with Barclays.

Guy Drummond Hardwick

So to go back to the gross margin. If you think about it on a year-on-year basis, should we assume that Q4 and perhaps into next year, you still have the mix headwind of large customers growing faster than small and midsized customers to offset perhaps better price cost and some other tailwinds that you referenced in the Q3 press release.

Max Tunnicliff

Yes, Guy, I'll all state the way I'm looking at it. So we will -- we do expect to always not -- always is hard to define, we expect over the the coming years as we continue to deploy our strategy of really winning with the biggest customers, not ignoring the midsize, but focusing on the big ones, focusing the customers that are midsize, that can be big customers. That's a very deliberate strategy that will usually result in a year-over-year impact of around 60 basis points, 50 basis points in that ballpark. The other mix components of our business are largely not material, whether it be product mix and things like that. Now we'll have some geographic mix as we grow faster, as I said earlier. So yes, you would on a year-over-year basis, typically expect a starting point of 50 to 60 basis point headwind on our gross margin. As you look at Q4, and if you look back at our materials from Q4, you would factor in what we described as 50 basis points of timing that we encountered in Q4 2025. And that would be -- that would largely offset, if not wash it completely way that mix impact in the quarter. And then of course, we're always looking for opportunities, whether in margin, whether it's sourcing, of course, the pricing work all those other things. But I give you just the mix component as a baseline starting point with our margin profile.

And Guy, if you have a second question that's perfectly fine too. We -- as Jeff said, I hung up on you also, we don't want to end too early. But if there was a follow-up question, feel free otherwise, we'll move into the close.

Guy Drummond Hardwick

Obviously, in the quarter, you did a really there's very good spread between gross profit growth up 14%, and OpEx are up about 9.5%. I know you kind of answered it on the incremental's question, but to what extent was that less than double-digit growth in OpEx, I think it was improved versus the previous quarter helped by the headcount reduction or the natural reduction in head count, and is that sort of a trend going forward, how we should think about headcount total OpEx growth and maybe headcount growth as well if you have any thoughts on that?

Max Tunnicliff

Yes. The largest driver, you're right, was headcount. Second was occupancy expenses. And so we're not providing guidance on these elements is the thing, but we're -- this is not like -- there's -- as you can tell from our comments around what's driving this, there's a structural benefit to our head count and in fact, direct/indirect impact on our occupancy that we see going forward. And so we've got a little more runway on getting better usage of tools, putting work in the right place, call it, optimizing our footprint. Of course, we're going to keep adding hubs and doing those things. And some of that could be footprint changes from the branch side. So we're going to constantly pursue cost opportunities and efficiency opportunities while focusing on #1 growing the business. And so yes, I just want to reiterate, it's not -- this is not a blip, like a onetime blip. It's more of a structural improvement in way of working within our sales force primarily. And I shouldn't exclude it just sales force. It's our labor.

Jeffery Watts

So looks like we come to the end of our time. I'll just kind of close it out with this, thanks again to the Blue Team. Q3 was strong, and it was led by share gains. Earnings grew faster than sales. Operating margin expanded and returns on capital remained excellent. We thought some work to do, I think, on the price cost and maybe some of our execution, but the strategy is working and the Blue Team is executing. So we're staying very disciplined. And I just want to thank you all for your time today, and hope you have a great rest of your week. Thank you.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation, and have a wonderful day.