Tractor Supply Company (NASDAQ: TSCO), the largest rural
lifestyle retailer in the United States (the “Company”), today
reported financial results for its second quarter ended June 29,
2024.
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- Net Sales Increase of 1.5% to $4.25 Billion
- Comparable Store Sales Decrease of 0.5%
- Diluted Earnings per Share (“EPS”) of $3.93
- Company Updates 2024 Financial Outlook
“We are pleased with our second quarter EPS results that were in
line with our outlook. My sincere appreciation goes out to our more
than 50,000 Team Members for living our Mission and Values every
day as we focus on taking care of our customers and each other. The
team continued to execute extremely well, upholding the high
standards we set for ourselves every day. At the halfway point of
the year, we have made significant progress on our Life Out Here
strategy. We continue to create more separation between us and our
competition, thanks to our Team Members and the meaningful
relationships they have with our customers,” said Hal Lawton,
President and Chief Executive Officer of Tractor Supply.
Lawton continued, “We are confident that we have the right plans
in place to win with our customers given the strength of our second
half operational initiatives. We remain excited about the
significant market share growth opportunities ahead of us as we
focus on the continued creation of long-term value for our
shareholders.”
Second Quarter 2024
Results
Net sales for the second quarter of 2024 increased 1.5% to $4.25
billion from $4.18 billion in the second quarter of 2023. The
increase in net sales was driven by new store openings, partially
offset by the decline in comparable store sales. Comparable store
sales decreased 0.5%, as compared to an increase of 2.5% in the
prior year’s second quarter, driven by a comparable average
transaction count decline of 0.6%, partially offset by a comparable
average ticket increase of 0.1%. Comparable store sales results
reflect strength in seasonal merchandise including big ticket,
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 2.7% to $1.56 billion from $1.51 billion
in the prior year’s second quarter, and gross margin increased 43
basis points to 36.6% from 36.2% in the prior year’s second
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 4.1% to $994.2
million from $955.4 million in the prior year’s second quarter. As
a percentage of net sales, SG&A expenses increased 58 basis
points to 23.4% from 22.8% in the second quarter of 2023. The
increase in SG&A as a percent of net sales was primarily
attributable to planned growth investments, which included the
onboarding of a new distribution center and higher depreciation and
amortization, as well as modest deleverage of the Company’s fixed
costs given the decline in comparable store sales. These factors
were partially offset by productivity improvements and strong cost
control. During the second quarter of 2024, the Company’s ongoing
sale-leaseback strategy benefited SG&A by approximately 12
basis points, net of transaction and repair costs, from the sale of
two Tractor Supply locations.
Operating income was $561.5 million in the second quarter of
2024 compared to $559.3 million in the second quarter of 2023.
The effective income tax rate was 22.7% compared to 23.0% in the
second quarter of 2023.
Net income increased 0.9% to $425.2 million from $421.2 million.
Diluted EPS increased 2.6% to $3.93 compared to $3.83 in the second
quarter of 2023.
The Company repurchased approximately 0.5 million shares of its
common stock for $139.2 million and paid quarterly cash dividends
totaling $118.5 million, returning a total of $257.7 million of
capital to shareholders in the second quarter of 2024.
The Company opened 21 new Tractor Supply stores and three new
Petsense by Tractor Supply stores in the second 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
Net Sales
$14.8 billion to $15.0
billion
$14.7 billion to $15.1
billion
Comparable Store Sales
(0.5%) to +1.0%
(1.0%) to +1.5%
Operating Margin Rate
9.8% to 10.1%
9.7% to 10.1%
Net Income
$1.08 billion to $1.12
billion
$1.06 billion to $1.13
billion
Earnings per Diluted Share
$10.00 to $10.40
$9.85 to $10.50
Conference Call
Information
Tractor Supply Company will hold a conference call today,
Thursday, July 25, 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 June 29, 2024, the Company operated 2,254 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 June 29, 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.
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 upcoming Quarterly Report on
Form 10-Q for the quarter ended June 29, 2024, which will describe
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, upcoming
Quarterly Report on Form 10-Q for the quarter ended June 29, 2024,
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
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
% of
% of
% of
% of
Net
Net
Net
Net
Sales
Sales
Sales
Sales
Net sales
$
4,246,622
100.00
%
$
4,184,695
100.00
%
$
7,641,456
100.00
%
$
7,483,920
100.00
%
Cost of merchandise sold
2,690,996
63.37
2,669,926
63.80
4,864,976
63.67
4,799,243
64.13
Gross profit
1,555,626
36.63
1,514,769
36.20
2,776,480
36.33
2,684,677
35.87
Selling, general and administrative
expenses
884,903
20.84
853,158
20.39
1,738,338
22.75
1,681,393
22.47
Depreciation and amortization
109,265
2.57
102,279
2.44
213,558
2.79
199,512
2.67
Operating income
561,458
13.22
559,332
13.37
824,584
10.79
803,772
10.74
Interest expense, net
11,612
0.27
12,343
0.30
23,514
0.31
25,023
0.33
Income before income taxes
549,846
12.95
546,989
13.07
801,070
10.48
778,749
10.41
Income tax expense
124,650
2.94
125,755
3.01
177,707
2.33
174,427
2.33
Net income
$
425,196
10.01
%
$
421,234
10.07
%
$
623,363
8.16
%
$
604,322
8.07
%
Net income per share:
Basic
$
3.95
$
3.85
$
5.78
$
5.51
Diluted
$
3.93
$
3.83
$
5.75
$
5.47
Weighted average shares
outstanding:
Basic
107,730
109,426
107,838
109,735
Diluted
108,235
110,041
108,381
110,411
Dividends declared per common share
outstanding
$
1.10
$
1.03
$
2.20
$
2.06
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
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Net income
$
425,196
$
421,234
$
623,363
$
604,322
Other comprehensive (loss) / income:
Change in fair value of interest rate
swaps, net of taxes
(1,382
)
778
(2,113
)
(1,059
)
Total other comprehensive (loss) /
income
(1,382
)
778
(2,113
)
(1,059
)
Total comprehensive income
$
423,814
$
422,012
$
621,250
$
603,263
Consolidated Balance Sheets
(Unaudited)
(in thousands)
June 29, 2024
July 1, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
394,748
$
620,031
Inventories
3,000,033
2,660,052
Prepaid expenses and other current
assets
244,844
297,191
Total current assets
3,639,625
3,577,274
Property and equipment, net
2,566,723
2,185,476
Operating lease right-of-use assets
3,225,156
2,957,792
Goodwill and other intangible assets
269,520
267,088
Other assets
83,500
45,193
Total assets
$
9,784,524
$
9,032,823
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,436,520
$
1,272,232
Accrued employee compensation
69,920
66,181
Other accrued expenses
557,721
464,267
Current portion of finance lease
liabilities
3,405
2,860
Current portion of operating lease
liabilities
382,111
317,730
Income taxes payable
94,858
114,194
Total current liabilities
2,544,535
2,237,464
Long-term debt
1,730,467
1,727,504
Finance lease liabilities, less current
portion
29,661
32,999
Operating lease liabilities, less current
portion
2,980,876
2,762,877
Deferred income taxes
54,418
59,157
Other long-term liabilities
139,235
125,670
Total liabilities
7,479,192
6,945,671
Stockholders’ equity:
Common stock
1,423
1,418
Additional paid-in capital
1,349,198
1,283,589
Treasury stock
(5,717,944
)
(5,210,524
)
Accumulated other comprehensive income
4,680
10,216
Retained earnings
6,667,975
6,002,453
Total stockholders’ equity
2,305,332
2,087,152
Total liabilities and stockholders’
equity
$
9,784,524
$
9,032,823
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
June 29, 2024
July 1, 2023
Cash flows from operating
activities:
Net income
$
623,363
$
604,322
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
213,558
199,512
(Gain)/loss on disposition of property and
equipment
(4,210
)
(474
)
Share-based compensation expense
25,124
30,179
Deferred income taxes
(10,712
)
30,916
Change in assets and liabilities:
Inventories
(354,179
)
34,626
Prepaid expenses and other current
assets
(33,345
)
(22,439
)
Accounts payable
256,717
(126,400
)
Accrued employee compensation
(21,558
)
(56,795
)
Other accrued expenses
19,996
(26,994
)
Income taxes
97,319
104,723
Other
5,270
11,145
Net cash provided by operating
activities
817,343
782,321
Cash flows from investing
activities:
Capital expenditures
(349,818
)
(349,586
)
Proceeds from sale of property and
equipment
18,487
761
Proceeds from Orscheln acquisition net
working capital settlement
—
4,310
Net cash used in investing activities
(331,331
)
(344,515
)
Cash flows from financing
activities:
Borrowings under debt facilities
335,000
1,767,000
Repayments under debt facilities
(335,000
)
(1,195,000
)
Debt discounts and issuance costs
—
(9,729
)
Principal payments under finance lease
liabilities
(864
)
(2,805
)
Repurchase of shares to satisfy tax
obligations
(22,717
)
(23,121
)
Repurchase of common stock
(255,756
)
(345,653
)
Net proceeds from issuance of common
stock
28,349
15,252
Cash dividends paid to stockholders
(237,347
)
(226,221
)
Net cash used in financing activities
(488,335
)
(20,277
)
Net (decrease)/increase in cash and
cash equivalents
(2,323
)
417,529
Cash and cash equivalents at beginning of
period
397,071
202,502
Cash and cash equivalents at end of
period
$
394,748
$
620,031
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net of amounts capitalized
$
30,203
$
20,462
Income taxes cash paid
89,875
36,226
Supplemental disclosures of non-cash
activities:
Non-cash accruals for property and
equipment
$
61,418
$
27,031
Increase of operating lease assets and
liabilities from new or modified leases
272,524
260,268
Increase of finance lease assets and
liabilities from new or modified leases
—
450
Selected
Financial and Operating Information
(Unaudited)
Three Months Ended
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Sales Information:
Comparable store sales
(decrease)/increase
(0.5
)%
2.5
%
0.2
%
2.3
%
New store sales (% of total sales)
2.0
%
4.8
%
2.0
%
4.5
%
Average transaction value
$
63.46
$
63.56
$
61.24
$
61.44
Comparable store average transaction value
(decrease)/increase (a)
0.1
%
0.6
%
(0.1
)%
1.6
%
Comparable store average transaction count
(decrease)/increase
(0.6
)%
1.8
%
0.3
%
0.7
%
Total selling square footage (000’s)
38,383
37,809
38,383
37,809
Exclusive brands (% of total sales)
26.7
%
28.0
%
28.1
%
29.8
%
Imports (% of total sales)
10.9
%
11.5
%
11.0
%
11.5
%
Store Count Information:
Tractor Supply
Beginning of period
2,233
2,164
2,216
2,147
New stores opened
21
17
38
34
Stores closed
—
—
—
—
End of period
2,254
2,181
2,254
2,181
Petsense by Tractor Supply
Beginning of period
202
189
198
186
New stores opened
3
3
7
6
Stores closed
—
—
—
—
End of period
205
192
205
192
Consolidated end of period
2,459
2,373
2,459
2,373
Pre-opening costs (000’s)
$
2,251
$
4,878
$
4,613
$
7,942
Balance Sheet Information:
Average inventory per store (000’s)
(b)
$
1,138.0
$
1,032.9
$
1,138.0
$
1,032.9
Inventory turns (annualized)
3.64
3.92
3.41
3.57
Share repurchase program:
Cost (000’s) (c)
$
140,546
$
157,448
$
259,089
$
354,616
Average purchase price per share
$
272.52
$
222.42
$
254.81
$
225.34
(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
Six Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Capital Expenditures
(millions):
Existing stores
$
76.4
$
79.1
$
134.2
$
162.1
New stores, relocated stores and stores
not yet opened
58.0
28.3
119.7
61.5
Information technology
35.7
29.2
60.1
51.1
Distribution center capacity and
improvements
19.1
54.1
32.2
73.7
Corporate and other
3.4
1.0
3.6
1.2
Total
$
192.6
$
191.7
$
349.8
$
349.6
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240725392237/en/
Mary Winn Pilkington (615) 440-4212 Joseph Underwood (615)
440-4658 investorrelations@tractorsupply.com
Tractor Supply (NASDAQ:TSCO)
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