Tractor Supply · Earnings release

EX-99.12ex991-q32024earningsrelease.htmEX-99.1 PRESS RELEASE DATED OCTOBER 24, 2024 Document

TRACTOR SUPPLY COMPANY REPORTS THIRD QUARTER 2024 FINANCIAL RESULTS; UPDATES FISCAL 2024 FINANCIAL OUTLOOK

Brentwood, Tenn., October 24, 2024 - Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retailer in the United States (the “Company”), today reported financial results for its third quarter ended September 28, 2024.

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Net Sales Increased 1.6% to $3.47 Billion

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Comparable Store Sales Experienced a Slight Decrease of 0.2%

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Diluted Earnings per Share (“EPS”) of $2.24

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Company Raises Lower End of Annual Guidance for Sales and Earnings

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Definitive Agreement Reached to Acquire Allivet, a leading online pet pharmacy

“We delivered on our expectations for the third quarter amid a tepid retail sales environment while advancing our Life Out Here strategy. The fundamentals of our business remain strong with ongoing market share gains. With nearly 50% of our stores in Project Fusion layout and more than 550 garden centers, we continue to invest in our stores, supply chain and capabilities that build customer loyalty and elevate the standard for our sector. My thanks and appreciation go out to the entire Tractor Supply team for their engagement and commitment to serving Life Out Here, especially during this challenging hurricane season,” said Hal Lawton, President and Chief Executive Officer of Tractor Supply.

“We remain very excited about the future for Tractor Supply to better serve our customers, capture market share, generate consistent, profitable growth and create ongoing long-term value for our shareholders. Today’s announcement of our acquisition of Allivet, a leading online pet pharmacy, is a great example of unlocking new opportunities for growth. We look forward to bringing pet Rx to our 37 million Neighbor’s Club members. As we look towards the back half of the decade, the team is energized to continue to capitalize on the many significant opportunities within our Life Out Here strategy and we look forward to sharing more details in the coming months.”

Net sales for the third quarter of 2024 increased 1.6% to $3.47 billion from $3.41 billion in the third quarter of 2023. The increase in net sales was driven by new store openings. Comparable store sales declined 0.2%, as compared to the third quarter of 2023, driven by a comparable average transaction count increase of 0.3%, offset by a comparable average ticket decrease of 0.5%. Comparable store sales results reflect continued strength in big ticket categories, partially offset by declines in year-round discretionary categories. As expected, consumable, usable and edible products were modestly negative with positive unit growth offset by average unit price pressure.

Gross profit increased 3.2% to $1.29 billion from $1.25 billion in the prior year’s third quarter, and gross margin increased 56 basis points to 37.2% from 36.7% in the prior year’s third quarter. The gross margin rate increase was primarily attributable to ongoing lower transportation costs along with disciplined product cost management and the continued execution of an everyday low price strategy. These improvements in gross margin rate were partially offset by growth in big ticket categories, which have below chain-average margins.

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased 6.2% to $965.8 million from $909.6 million in the prior year’s third quarter. As a percentage of net sales, SG&A expenses increased 119 basis points to 27.8% from 26.7% in the third quarter of 2023. The increase in SG&A as a percent of net sales was primarily attributable to planned growth investments including the onboarding of a new distribution

center, lapping a one-time depreciation expense benefit in the prior year of $11 million or approximately 35 basis points and modest deleverage of the Company’s fixed costs given the slight decline in comparable store sales. These factors were partially offset by a disciplined focus on productivity, cost control and modest benefits from the Company’s sale-leaseback strategy.

Operating income was $324.6 million in the third quarter of 2024 compared to $340.9 million in the third quarter of 2023.

The effective income tax rate was 22.3% compared to 23.0% in the third quarter of 2023.

Net income decreased 5.3% to $241.5 million from $255.0 million. Diluted EPS decreased 3.9% to $2.24 compared to $2.33 in the third quarter of 2023. The above-mentioned one-time depreciation expense adjustment benefited the prior year’s diluted EPS by $0.08.

The Company repurchased approximately 0.6 million shares of its common stock for $149.8 million and paid quarterly cash dividends totaling $117.8 million, returning a total of $267.6 million of capital to shareholders in the third quarter of 2024.

The Company opened 16 new Tractor Supply stores in the third quarter of 2024.

Fiscal Year 2024 Financial Outlook

Based on year-to-date performance and its outlook, Tractor Supply is updating its financial guidance. For fiscal year 2024, the Company now expects the following:

Updated

Previous

G1Net Sales

G2Comparable Store Sales

G3Operating Margin Rate

G4Net Income

G5Earnings per Diluted Share

Conference Call Information

Tractor Supply Company will hold a conference call today, Thursday, October 24, 2024 at 10 a.m. ET. The call will be webcast live at IR.TractorSupply.com. An investor presentation will be available on the investor relations section of the Company’s website at least 15 minutes prior to the conference call.

Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the webcast.

A replay of the webcast will also be available at IR.TractorSupply.com shortly after the conference call concludes.

About Tractor Supply Company

For more than 85 years, Tractor Supply Company (NASDAQ: TSCO) has been passionate about serving the needs of recreational farmers, ranchers, homeowners, gardeners, pet enthusiasts and all those who enjoy living Life Out Here. Tractor Supply is the largest rural lifestyle retailer in the U.S., ranking 293 on the Fortune 500. The Company’s more than 50,000 Team Members are known for delivering legendary service and helping customers pursue their passions, whether that means being closer to the land, taking care of animals or living a hands-on, DIY lifestyle. In store and online, Tractor Supply provides what customers need – anytime, anywhere, any way they choose at the low prices they deserve.

As of September 28, 2024, the Company operated 2,270 Tractor Supply stores in 49 states. For more information on Tractor Supply, visit www.tractorsupply.com.

Tractor Supply Company also owns and operates Petsense by Tractor Supply, a small-box pet specialty supply retailer providing products and services for pet owners. As of September 28, 2024, the Company operated 205 Petsense by Tractor Supply stores in 23 states. For more information on Petsense by Tractor Supply, visit www.Petsense.com.

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Contacts:

Investors

investorrelations@tractorsupply.com

Media

corporatecommunications@tractorsupply.com

Forward-Looking Statements

This press release contains certain forward-looking statements, including statements regarding market share gains, value creation, customer trends, new stores and distribution centers, property development plans, return of capital, and financial guidance for 2024, including net sales, comparable store sales, operating margin rates, net income, earnings per diluted share, capital expenditures and plans, share repurchase, and sale-leaseback transactions. All forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, are subject to the finalization of the Company’s quarterly financial and accounting procedures, and may be affected by certain risks and uncertainties, any one, or a combination, of which could materially affect the results of the Company’s operations.

Forward-looking statements are usually identified by or are associated with such words as “will,” “would,” “intend,” “expect,” “continue,” “believe,” “anticipate,” “optimistic,” “forecasted” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. As with any business, all phases of our operations are subject to facts outside of our control. These factors include, without limitation, those factors discussed in the “Risk Factors” section of the Company’s Annual Reports or Form 10-K and other filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended June 29, 2024, which describes additional risks relating to the scrutiny of our social and environmental strategies, initiatives and targets and our policies related thereto, which could adversely affect public perception of our business, employee morale, customer or stockholder support and have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

Forward-looking statements made by or on behalf of the Company are based on knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results could differ materially from those reflected by any forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these cautionary statements and those contained in the Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, and other filings with the Securities and Exchange Commission. There can be no assurance that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business and operations.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

(Financial tables to follow)

Consolidated Statements of Income

(Unaudited)

(in thousands, except per share and percentage data)

Three Months Ended

Nine Months Ended

% of

% of

% of

% of

Net

Net

Net

Net

Sales

Sales

Sales

Sales

Net sales

$

$

$

$

Cost of merchandise sold

Gross profit

Selling, general and administrative expenses

Depreciation and amortization

Operating income

Interest expense, net

Income before income taxes

Income tax expense

Net income

$

$

$

$

Net income per share:

Basic

$

$

$

$

Diluted

$

$

$

$

Weighted average shares outstanding:

Basic

Diluted

Dividends declared per common share outstanding

$

$

$

$

Note: Percent of net sales amounts may not sum to totals due to rounding.

Consolidated Statements of Comprehensive Income

(Unaudited)

(in thousands)

Three Months Ended

Nine Months Ended

Net income

$

$

$

$

Other comprehensive (loss) / income:

Change in fair value of interest rate swaps, net of taxes

Total other comprehensive (loss) / income

Total comprehensive income

$

$

$

$

Consolidated Balance Sheets

(Unaudited)

(in thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

$

Inventories

Prepaid expenses and other current assets

Income taxes receivable

—

Total current assets

Property and equipment, net

Operating lease right-of-use assets

Goodwill and other intangible assets

Other assets

Total assets

$

$

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

$

Accrued employee compensation

Other accrued expenses

Current portion of finance lease liabilities

Current portion of operating lease liabilities

Income taxes payable

—

Total current liabilities

Long-term debt

Finance lease liabilities, less current portion

Operating lease liabilities, less current portion

Deferred income taxes

Other long-term liabilities

Total liabilities

Stockholders’ equity:

Common stock

Additional paid-in capital

Treasury stock

Accumulated other comprehensive income

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

$

$

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Nine Months Ended

Cash flows from operating activities:

Net income

$

$

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

(Gain)/loss on disposition of property and equipment

Share-based compensation expense

Deferred income taxes

Change in assets and liabilities:

Inventories

Prepaid expenses and other current assets

Accounts payable

Accrued employee compensation

Other accrued expenses

Income taxes

Other

Net cash provided by operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from sale of property and equipment

Proceeds from Orscheln acquisition net working capital settlement

—

Proceeds from sale of Orscheln corporate headquarters and distribution center

—

Net cash used in investing activities

Cash flows from financing activities:

Borrowings under debt facilities

Repayments under debt facilities

Debt discounts and issuance costs

—

Principal payments under finance lease liabilities

Repurchase of shares to satisfy tax obligations

Repurchase of common stock

Net proceeds from issuance of common stock

Cash dividends paid to stockholders

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

$

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest, net of amounts capitalized

$

$

Income taxes cash paid

Supplemental disclosures of non-cash activities:

Non-cash accruals for property and equipment

$

$

Increase of operating lease assets and liabilities from new or modified leases

Increase of finance lease assets and liabilities from new or modified leases

—

Selected Financial and Operating Information

(Unaudited)

Three Months Ended

Nine Months Ended

Sales Information:

Comparable store sales increase (decrease)

%

%

—

%

%

New store sales (% of total sales)

%

%

%

%

Average transaction value

Comparable store average transaction value (decrease)/increase (a)

%

%

%

%

Comparable store average transaction count increase

%

—

%

%

%

Total selling square footage (000’s)

Exclusive brands (% of total sales)

%

%

%

%

Imports (% of total sales)

%

%

%

%

Store Count Information:

Tractor Supply

Beginning of period

New stores opened

Stores closed

—

—

—

—

End of period

Petsense by Tractor Supply

Beginning of period

New stores opened

—

4

7

Stores closed

—

(1)

—

(1)

End of period

Consolidated end of period

Pre-opening costs (000’s)

Balance Sheet Information:

Average inventory per store (000’s) (b)

Inventory turns (annualized)

Share repurchase program:

Average purchase price per share

(a) Comparable store average transaction value changes include the impact of transaction value changes achieved on the current period change in transaction count.

(b) Assumes average inventory cost, excluding inventory in transit.

(c) Effective January 1, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock.

Note: Comparable store metrics percentages may not sum to total due to rounding.

Three Months Ended

Nine Months Ended

Capital Expenditures (millions):

Existing stores

$

$

$

$

New stores, relocated stores and stores not yet opened

Information technology

Distribution center capacity and improvements

Corporate and other

Total

$

$

$

$