Tractor Supply Company (NASDAQ: TSCO), the largest rural
lifestyle retailer in the United States (the “Company”), today
reported financial results for its fourth quarter (13 weeks) and
fiscal year (52 weeks) ended December 30, 2023. The comparable
prior-year periods in fiscal 2022 included 14 weeks and 53 weeks,
respectively.
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the full release here:
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- Fourth Quarter Sales Performance Was in Line with the Company’s
Expectations with a Comparable Store Sales Decline of 4.2%
- Fiscal Year 2023 Net Sales Increased 2.5%; Fiscal Year
Comparable Store Sales Were Even with the Prior Year
- Fourth Quarter Diluted Earnings per Share (“EPS”) of $2.28 and
Fiscal Year 2023 Diluted EPS of $10.09
- Returned More Than $1.0 Billion of Capital to Shareholders in
Fiscal Year 2023
- Company Provides Fiscal Year 2024 Diluted EPS Outlook of $9.85
to $10.50
"As we recently marked Tractor Supply’s milestone 85th
anniversary, my thanks and appreciation go out to our more than
50,000 Team Members for their dedication to Life Out Here and for
living our Mission and Values. While our financial performance in
2023 did not meet our initial expectations, our team successfully
navigated a highly dynamic environment with agility, operational
resiliency and a focus on our strategic investments. As we exit
2023, our business has never been stronger. Our healthy customer
engagement, all time high customer satisfaction scores, peak
productivity of our supply chain, technology enhancements and the
scaled transformation of our store base all serve as proof points
of the strength of our business," said Hal Lawton, President and
Chief Executive Officer of Tractor Supply.
"In 2024, we will continue to invest to strengthen our
competitive advantages and to capture the significant growth
opportunities in our market. We believe that our business can
continue to perform well in the coming years given the investments
we have made in our Life Out Here strategy. We remain excited about
our bright future and are committed to delivering sustained
long-term value creation for our shareholders," said Lawton.
Fourth Quarter 2023 Results
Net sales for the fourth quarter of 2023 decreased 8.6% to $3.66
billion from $4.01 billion in the fourth quarter of 2022. The prior
year’s fourth quarter included an extra sales week as part of the
Company’s 53-week calendar in 2022, which negatively impacted the
period over period sales performance by approximately 5.6
percentage points. The decrease in net sales was also attributable
to a decline in comparable store sales, partially offset by
positive sales contributions from new stores. Comparable store
sales decreased 4.2%, as compared to an increase of 8.6% in the
prior year’s fourth quarter, driven by a comparable average ticket
decline of 1.5% and a comparable average transaction count decline
of 2.7%. Comparable store sales performance reflects continued
strength in year-round consumable, usable and edible (“C.U.E.”)
categories, offset by softness in cold weather products,
discretionary categories and, to a lesser extent, big ticket items.
In the fourth quarter of 2022, comparable store sales benefited by
approximately 200 basis points from a late December winter
storm.
Gross profit decreased 5.2% to $1.29 billion from $1.36 billion
in the prior year’s fourth quarter, while gross margin increased
129 basis points to 35.3% from 34.0% in the prior year’s fourth
quarter. The gross margin rate increase was attributable to ongoing
lower transportation costs and disciplined product cost management,
modestly offset by negative product mix. Gross margin continued to
benefit from the Company’s ongoing execution of an everyday low
price strategy, complemented by the use of its Neighbor’s Club
loyalty program.
Selling, general and administrative (“SG&A”) expenses,
including depreciation and amortization, decreased 4.5% to $958.8
million from $1.00 billion in the prior year’s fourth quarter. As a
percentage of net sales, SG&A expenses increased 113 basis
points to 26.2% from 25.1% in the fourth quarter of 2022. The
increase in SG&A as a percentage of net sales was primarily
attributable to the Company’s planned growth investments, which
included higher depreciation and amortization and the onboarding of
a new distribution center, as well as higher medical claims and
fixed cost deleverage. These factors were partially offset by a
decrease in incentive compensation and the completion of a
previously announced sale-leaseback of five Tractor Supply store
locations. The sale-leaseback benefited SG&A by approximately
40 basis points.
Operating income decreased 7.0% to $334.2 million from $359.2
million in the fourth quarter of 2022.
The effective income tax rate was 23.1% compared to 22.4% in the
fourth quarter of 2022.
Net income decreased 8.5% to $247.9 million from $270.9 million.
Diluted EPS decreased 6.2% to $2.28 compared to $2.43 in the fourth
quarter of 2022. The benefit of the 53rd week contributed
approximately $0.16 to diluted EPS in the fourth quarter of
2022.
The Company repurchased approximately 0.5 million shares of its
common stock for $110.4 million and paid quarterly cash dividends
totaling $111.4 million, returning $221.8 million of capital to
shareholders in the fourth quarter of 2023.
The Company opened 19 new Tractor Supply stores and three new
Petsense by Tractor Supply stores, and closed one Tractor Supply
store in the fourth quarter of 2023.
Fiscal Year 2023 Results Net
sales for fiscal 2023 increased 2.5% to $14.56 billion from $14.20
billion in fiscal 2022. Comparable store sales were even with the
prior year versus a 6.3% increase in fiscal 2022.
Gross profit increased 5.1% to $5.23 billion from $4.97 billion
in fiscal 2022, and gross margin increased 92 basis points to 35.9%
from 35.0% in fiscal 2022.
SG&A expenses, including depreciation and amortization and
asset impairment, increased 6.0% to $3.75 billion from $3.54
billion in fiscal 2022. As a percent of net sales, SG&A
expenses increased 86 basis points to 25.8% from 24.9% in fiscal
2022.
Operating income increased 3.1% to $1.48 billion compared to
$1.43 billion in fiscal 2022.
The effective income tax rate was 22.7% compared to 22.5% in
fiscal 2022.
Net income increased 1.7% to $1.11 billion from $1.09 billion,
and diluted EPS increased 3.9% to $10.09 from $9.71 in fiscal 2022.
The benefit of the 53rd week contributed approximately $0.16 to
diluted EPS in fiscal 2022.
In fiscal 2023, the Company repurchased approximately 2.7
million shares of its common stock for $597.0 million. The Company
also paid quarterly cash dividends totaling $449.6 million during
fiscal 2023, returning $1.05 billion of capital to
shareholders.
During fiscal 2023, the Company opened 70 new Tractor Supply
stores and 13 new Petsense by Tractor Supply stores, and closed one
Tractor Supply store and one Petsense by Tractor Supply store. In
2023, the Company rebranded 81 Orscheln Farm and Home stores to
Tractor Supply that it acquired in 2022.
Fiscal Year 2024 Financial
Outlook The Company is providing its financial guidance
for fiscal 2024. This outlook is based on what the Company can
reasonably predict at this time.
For fiscal 2024, the Company expects the following:
Net Sales
$14.7 billion to $15.1
billion
Comparable Store Sales
(1.0%) to +1.5%
Operating Margin Rate
9.7% to 10.1%
Net Income
$1.06 billion to $1.13
billion
Earnings per Diluted Share
$9.85 to $10.50
Capital Expenditures, Net of Sale
Leaseback Proceeds
$625 million to $700 million
Share Repurchases
$575 million to $625 million
Capital plans for 2024 include opening a total of approximately
80 Tractor Supply stores, continuing Project Fusion remodels and
garden center transformations, completion of its 10th distribution
center and opening a total of 10 to 15 new Petsense by Tractor
Supply stores. The fiscal year 2024 EPS guidance also includes
benefits from the Company’s ongoing sale-leaseback transactions
which the Company anticipates will be in line with the prior year’s
transactions.
Conference Call Information
Tractor Supply Company will hold a conference call today, Thursday,
February 1, 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 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 291 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 December 30, 2023, the Company operated 2,216 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 December 30, 2023, the
Company operated 198 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, positive
customer trends, new stores and distribution centers, the Orscheln
Farm and Home conversion, property development plans, and financial
guidance for 2024, including net sales, comparable store sales,
operating margin rates, net income, diluted earnings per 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, national, regional, and local economic
conditions affecting consumer spending; the timing and mix of goods
sold; the timing and acceptance of new products; purchase price
volatility (including inflationary and deflationary pressures),
transportation costs and constraints in the supply chain affecting
timing and availability of merchandise inventory; the ability to
increase sales at existing stores or on our e-commerce platforms;
the ability to manage growth and identify suitable locations; the
ability to open new stores in the time, manner, and number
currently contemplated; the ability to execute definitive
agreements, satisfy closing conditions and close periodically
planned sale-leaseback transactions on a timely basis, on favorable
terms or at all; economic uncertainty, including rising costs for
commodities, raw materials, energy, and finished goods; the ability
to successfully manage expenses and to execute our key gross margin
enhancing initiatives; the ability to open distribution centers in
the anticipated timeframe and within budget; the impact of new
stores on our business; competition, including that from online
competitors; weather conditions; the seasonal nature of our
business; the ability to retain vendors and our reliance on foreign
suppliers; the ability to attract, train, and retain qualified
employees, as well as increasing labor and benefit costs; rising
interest rates; tightening of credit markets; continued domestic
impact of global geopolitical unrest; continued disruption and
uncertainty in the supply chain and shipping channels, including
potential disruption to domestic transportation channels; the
impact of public health issues; difficulties in integration of
Orscheln Farm and Home; potential adverse reactions or changes to
business or employee relationships, including those resulting from
the announcement of an acquisition; significant increases in costs
or significant delays associated with new store openings, remodels,
or relocations; our ability to meet our sustainability,
stewardship, carbon emission, and Diversity, Equity, and Inclusion
related Environmental, Social, and Governance projections, goals,
and commitments; the imposition of tariffs on imported products or
the disallowance of tax deductions on imported products; potential
judgments, fines, legal fees, and other costs; breach of
information systems or theft of employee or customer data;
effective tax rate changes and results of examination by taxing
authorities; the ability to maintain an effective system of
internal control over financial reporting and changes in accounting
standards, assumptions, and estimates; severe weather and the
effects of climate change as well as 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.
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 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)
Condensed Consolidated Statements of Income
(Unaudited) (in thousands, except per share and percentage
data)
Three Months Ended
Year Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
(13 weeks)
(14 weeks)
(52 weeks)
(53 weeks)
% of
% of
% of
% of
Net
Net
Net
Net
Sales
Sales
Sales
Sales
Net sales
$
3,659,841
100.00%
$
4,006,375
100.00%
$
14,555,741
100.00%
$
14,204,717
100.00%
Cost of merchandise sold
2,366,778
64.67
2,642,750
65.96
9,327,522
64.08
9,232,513
65.00
Gross profit
1,293,063
35.33
1,363,625
34.04
5,228,219
35.92
4,972,204
35.00
Selling, general and administrative
expenses
855,554
23.38
909,595
22.70
3,356,258
23.06
3,194,199
22.48
Depreciation and amortization
103,274
2.82
94,820
2.37
393,049
2.70
343,062
2.42
Operating income
334,235
9.13
359,210
8.97
1,478,912
10.16
1,434,943
10.10
Interest expense, net
11,948
0.33
10,241
0.26
46,510
0.32
30,633
0.22
Income before income taxes
322,287
8.80
348,969
8.71
1,432,402
9.84
1,404,310
9.88
Income tax expense
74,384
2.03
78,099
1.95
325,176
2.23
315,598
2.22
Net income
$
247,903
6.77%
$
270,870
6.76%
$
1,107,226
7.61%
$
1,088,712
7.66%
Net income per share:
Basic
$
2.29
$
2.45
$
10.15
$
9.78
Diluted
$
2.28
$
2.43
$
10.09
$
9.71
Weighted average shares
outstanding:
Basic
108,139
110,433
109,096
111,336
Diluted
108,819
111,282
109,746
112,149
Dividends declared per common share
outstanding
$
1.03
$
0.92
$
4.12
$
3.68
Note: Percent of net sales amounts may not
sum to totals due to rounding.
Condensed Consolidated Statements of Comprehensive
Income (Unaudited) (in thousands)
Three Months Ended
Year Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
(13 weeks)
(14 weeks)
(13 weeks)
(53 weeks)
Net income
$
247,903
$
270,870
$
1,107,226
$
1,088,712
Other comprehensive (loss) / income:
Change in fair value of interest rate
swaps, net of taxes
(2,499
)
(1,023
)
(4,482
)
9,930
Total other comprehensive (loss) /
income
(2,499
)
(1,023
)
(4,482
)
9,930
Total comprehensive income
$
245,404
$
269,847
$
1,102,744
$
1,098,642
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
December 30,
2023
December 31,
2022
ASSETS
Current assets:
Cash and cash equivalents
$
397,071
$
202,502
Inventories
2,645,854
2,709,597
Prepaid expenses and other current
assets
218,553
245,676
Income taxes receivable
2,461
—
Total current assets
3,263,939
3,157,775
Property and equipment, net
2,437,184
2,083,616
Operating lease right-of-use assets
3,141,971
2,953,801
Goodwill and other intangible assets
269,520
253,262
Other assets
43,600
41,536
Total assets
$
9,156,214
$
8,489,990
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,179,803
$
1,398,288
Accrued employee compensation
91,478
120,302
Other accrued expenses
533,029
498,575
Current portion of finance lease
liabilities
3,311
3,179
Current portion of operating lease
liabilities
369,461
346,397
Income taxes payable
—
9,471
Total current liabilities
2,177,082
2,376,212
Long-term debt
1,728,964
1,164,056
Finance lease liabilities, less current
portion
31,388
34,651
Operating lease liabilities, less current
portion
2,902,858
2,721,877
Deferred income taxes
28,095
30,775
Other long-term liabilities
138,065
120,003
Total liabilities
7,006,452
6,447,574
Stockholders’ equity:
Common stock
1,419
1,415
Additional paid-in capital
1,318,446
1,261,283
Treasury stock
(5,458,855
)
(4,855,909
)
Accumulated other comprehensive income
6,793
11,275
Retained earnings
6,281,959
5,624,352
Total stockholders’ equity
2,149,762
2,042,416
Total liabilities and stockholders’
equity
$
9,156,214
$
8,489,990
Condensed Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
Year Ended
December 30,
2023
December 31,
2022
Cash flows from operating
activities:
Net income
$
1,107,226
$
1,088,712
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
393,049
343,062
(Gain)/loss on disposition of property and
equipment
(48,013
)
2,158
Share-based compensation expense
57,015
53,832
Deferred income taxes
6,172
51,693
Change in assets and liabilities:
Inventories
40,872
(349,742
)
Prepaid expenses and other current
assets
22,380
(64,060
)
Accounts payable
(218,829
)
162,335
Accrued employee compensation
(31,498
)
6,433
Other accrued expenses
(13,082
)
(13,137
)
Income taxes
(11,931
)
26,570
Other
30,672
49,123
Net cash provided by operating
activities
1,334,033
1,356,979
Cash flows from investing
activities:
Capital expenditures
(753,883
)
(773,369
)
Proceeds from sale of property and
equipment
86,504
1,044
Acquisition of Orscheln, net of cash
acquired
—
(390,765
)
Proceeds from sale of business assets
14,310
69,364
Net cash used in investing activities
(653,069
)
(1,093,726
)
Cash flows from financing
activities:
Borrowings under debt facilities
1,767,000
1,010,000
Repayments under debt facilities
(1,195,000
)
(832,000
)
Debt discounts and issuance costs
(9,729
)
—
Principal payments under finance lease
liabilities
(4,808
)
(4,058
)
Repurchase of shares to satisfy tax
obligations
(24,245
)
(28,592
)
Repurchase of common stock
(594,390
)
(700,063
)
Net proceeds from issuance of common
stock
24,397
25,535
Cash dividends paid to stockholders
(449,620
)
(409,603
)
Net cash used in financing activities
(486,395
)
(938,781
)
Net increase/(decrease) in cash and
cash equivalents
194,569
(675,528
)
Cash and cash equivalents at beginning of
period
202,502
878,030
Cash and cash equivalents at end of
period
$
397,071
$
202,502
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net of amounts capitalized
$
56,315
$
26,367
Income taxes cash paid
325,222
239,129
Supplemental disclosures of non-cash
activities:
Non-cash accruals for property and
equipment
$
60,055
$
45,742
Increase of operating lease assets and
liabilities from new or modified leases
628,991
416,457
Increase of finance lease assets and
liabilities from new or modified leases
450
5,143
Selected
Financial and Operating Information
(Unaudited)
Three Months Ended
Year Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
(13 weeks)
(14 weeks)
(52 weeks)
(53 weeks)
Sales Information:
Comparable store sales
(decrease)/increase
(4.2
)%
8.6
%
—
%
6.3
%
New store sales (% of total sales)
4.2
%
4.0
%
4.5
%
2.8
%
Average transaction value
$
60.48
$
61.56
$
60.67
$
60.42
Comparable store average transaction value
(decrease)/increase (a)
(1.5
)%
6.3
%
0.4
%
6.9
%
Comparable store average transaction count
(decrease)/increase
(2.7
)%
2.3
%
(0.4
)%
(0.6
)%
Total selling square footage (000’s)
38,476
37,269
38,476
37,269
Exclusive brands (% of total sales)
29.6
%
30.9
%
28.6
%
30.0
%
Imports (% of total sales)
14.8
%
15.5
%
12.2
%
12.5
%
Store Count Information:
Tractor Supply
(including Orscheln Farm and Home stores)
Beginning of period
2,198
2,027
2,147
2,003
New stores opened
19
39
70
63
Stores closed
(1
)
—
(1
)
—
Stores acquired
—
81
—
81
End of period
2,216
2,147
2,216
2,147
Petsense by Tractor
Supply
Beginning of period
195
180
186
178
New stores opened
3
6
13
9
Stores closed
—
—
(1
)
(1
)
End of period
198
186
198
186
Consolidated end of period
2,414
2,333
2,414
2,333
Pre-opening costs (000’s)
$
2,493
$
5,111
$
13,178
$
10,183
Balance Sheet Information:
Average inventory per store (000’s)
(b)
$
1,026.0
$
1,082.7
$
1,026.0
$
1,082.7
Inventory turns (annualized)
3.51
3.77
3.49
3.79
Share repurchase program:
Cost (000’s) (c)
$
111,553
$
92,047
$
602,947
$
700,063
Average purchase price per share
$
203.78
$
209.12
$
218.54
$
207.23
(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.
Note: For prior year selected financial
and operating information, with the exception of store count
information, new stores sales (% of total sales), total selling
square footage, and average inventory per store, all metrics listed
above exclude unconverted Orscheln Farm and Home stores.
Three Months Ended
Year Ended
December 30,
2023
December 31,
2022
December 30,
2023
December 31,
2022
Capital Expenditures
(millions):
Existing stores
$
83.8
$
140.8
$
330.0
$
367.7
New and relocated stores and stores not
yet opened
58.3
67.8
130.6
126.7
Information technology
48.2
42.6
134.6
119.5
Distribution center capacity and
improvements
35.8
70.7
156.2
156.1
Corporate and other
1.1
0.3
2.5
3.4
Total
$
227.2
$
322.2
$
753.9
$
773.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240201460523/en/
Tractor Supply Company Mary Winn Pilkington (615)
440-4212 Joseph Underwood (615) 440-4658
investorrelations@tractorsupply.com
Tractor Supply (NASDAQ:TSCO)
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Tractor Supply (NASDAQ:TSCO)
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