Bloomberg Talks: Fastenal CEO Dan Florness on Earnings

Date: October 13, 2025
Host: Bloomberg
Guest: Dan Florness, CEO of Fastenal

Episode Overview

This episode focuses on Fastenal’s latest quarterly earnings and the broader industrial climate, featuring a candid interview with CEO Dan Florness. Discussion centers on pricing pressures, tariff impacts, supply chain resilience, and the company’s response to sluggish industrial demand. Florness offers insights into Fastenal’s strategies for growth, pricing, and adapting to global economic shifts, while also addressing how AI and data center construction are shaping Fastenal’s business.

Key Discussion Points and Insights

1. Performance and Pricing Pressure

• Fastenal’s stock dipped ~6% post-earnings, despite a strong year-to-date performance (+22%), due to weaker-than-expected pricing and cautious market sentiment.
  • Dan Florness: "Part of the reason our stock's down is it's priced to perfection if you look at what it's done year to date and where the multiple has gone." (07:52)
• Company achieved double-digit growth for the first time in several years, but saw softer pricing for the second straight quarter.
  • "We had a double-digit quarter. We hadn’t seen that for a couple years." (07:52)
• Pricing strategy aims for neutrality: only raising prices to match costs, not to expand margins, to support customer relationships and growth.
  • "We will raise price to address costs... we really don't want to raise more than that because we believe it impairs our ability to grow as fast as we'd like." (07:52)

2. Customer Pricing and Expectations

• Customers consistently push back on pricing, regardless of size.
  • Dan Florness: "Customers always push back on pricing. Doesn't matter the size customer." (09:21)
• Fastenal seeks collaborative solutions, often finding alternatives to large price increases.
  • "Maybe it means it only has to be 2 [percent] and we'd rather go to 2 because that's what a supply chain partner does." (09:21)

3. Tariffs and Supply Chain Flexibility

• Tariffs are a persistent challenge, with regular, detailed updates to Fastenal’s sales force.
  • "The individual that handles pricing... was up to video number 14 as of July that he was serving out to the field, giving them guidance." (10:17)
• Fastenal actively diversifies its supply base — both geographically and logistically — to mitigate tariff impacts and maintain flexibility.
  • "We have worked to diversify our supplier base around the planet and a little bit more in North America, but really around the planet so to have diversity in supply so you're not caught off guard by some price change or a tariff change." (11:28)
  • "We have moved supply chains... bringing product directly into the west coast of Canada or the west coast of Mexico… Now you bypass the tariff." (11:28)
• Reducing not just their own, but also their customers’ exposure to any single country (notably China), is key.
  • "It's reducing our customers exposure to any market… but to any market that are on the receiving end of some of the political winds and create an unstable supply base for our customer." (13:09)

4. Industrial Sluggishness and Growth Amid Headwinds

• The industrial environment has been objectively sluggish since late 2022, according to the PMI index (sub-50).
  • “It's been sluggish since November of 2022… that's been sub 50 since November of 2022.” (13:59)
• Fastenal’s growth now comes from better execution and serving customers at subdued, but stable, demand levels.
  • "Even if your customers are at a subdued level, you can grow in that kind of environment and that's what's shining through in our numbers right now." (13:59)

5. AI’s Role and Data Center Construction

• AI trends are influencing Fastenal, both as a technology user and as a supplier to data centers.
  • "We have a meaningful improvement in our revenue as it relates to things like data centers... After it's built, we're supplying into that facility with things like air handling and maintenance equipment." (15:17)
• AI is also being harnessed internally to improve efficiency and market strategy.
  • "We're increasingly making use of AI in our own business and how we go to market." (15:59)
• Component sourcing for data centers varies, but Fastenal sees customers move away from China for critical infrastructure needs.
  • "Visited one [customer] about a year ago in Michigan where they were purposely avoiding China and they're selling directly into the data centers." (16:13)

6. The Current Cycle and Outlook

• Florness characterizes the current business environment as exceptionally volatile, but emphasizes that the fundamentals of serving customers well remain constant.
  • Dan Florness: "Odd in the fact that similar to what we saw in 18 but odd with the fact of it's just so damn fluid and there's so many things that occur from week to week, month to month that are outside the norm. But the fundamentals still work." (16:51)

Notable Quotes and Memorable Moments

• On Double-Digit Growth
  "We had a double-digit quarter. We hadn’t seen that for a couple years."
  – Dan Florness (07:52)

• On Tariff Mitigation Strategy
  "We have worked to diversify our supplier base around the planet... so to have diversity in supply so you're not caught off guard by some price change or a tariff change."
  – Dan Florness (11:28)

• On Industrial Sluggishness
  "It's been sluggish since November of 2022."
  – Dan Florness (13:59)

• On the Nature of Today's Business Environment
  "Odd in the fact that similar to what we saw in 18 but odd with the fact of it's just so damn fluid and there's so many things that occur from week to week, month to month that are outside the norm. But the fundamentals still work."
  – Dan Florness (16:51)

• On Data Centers and AI
  "We have a meaningful improvement in our revenue as it relates to things like data centers... In the case of customers that sell into that sector, that's actually a strong business for us right now."
  – Dan Florness (15:17)

Timestamps for Key Segments

• 07:25 – Dan Florness on Q3 results, pricing and growth
• 09:21 – Pricing approach and customer pushback
• 10:17 – How Fastenal addresses tariff volatility
• 11:28 – Supply chain diversification to mitigate tariffs
• 13:09 – Reducing exposure to geopolitical supply risks
• 13:59 – Sluggish industrial environment and resilience
• 15:17 – Data center construction, AI spend, and Fastenal’s role
• 16:51 – How this business cycle feels compared to previous ones

Episode Takeaways

• Fastenal’s strong year-to-date performance is clouded by recent pricing challenges and stock volatility, but underlying business remains robust, driven by effective supply chain management and adaptability.
• Ongoing tariff and geopolitical uncertainty has prompted extensive global supply chain diversification, with direct implications for pricing strategies and customer relationships.
• AI-driven trends and data center demand present both challenges and growth opportunities.
• CEO Dan Florness emphasizes the importance of agility, consistent customer service, and fundamentals in an atypically “fluid” and unpredictable industrial cycle.