BRENTWOOD, Tenn., April 20, 2011 /PRNewswire/ -- Tractor Supply
Company (NASDAQ: TSCO), the largest retail farm and ranch store
chain in the United States, today
announced financial results for its first fiscal quarter ended
March 26, 2011.
First Quarter Results
Net sales increased 17.7% to $836.6
million from $710.9 million in
the prior year's first quarter. Same-store sales increased
10.7%, compared to a 2.8% increase in the prior-year period.
The same-store sales increase was broad-based geographically
and across all major product categories. Consumable, usable and
edible (CUE) products, principally animal and pet-related
merchandise, continued to perform well. Seasonal merchandise also
experienced solid sales during the quarter.
Gross margin increased 18.5% to $273.6
million, or 32.7% of sales, compared to $230.9 million, or 32.5% of sales, in the prior
year's first quarter. The increase in gross margin reflects
improved direct product margin, partially offset by increased
transportation costs. The improvement in direct margin
resulted primarily from strategic sourcing, solid inventory
allocation, effective retail price management and strong
sell-through of products, which minimized markdowns.
Selling, general and administrative expenses, including
depreciation and amortization, improved to 29.3% of sales for the
first quarter compared to 30.2% of sales in the prior year's first
quarter. The improvement as a percent of sales was primarily
attributable to strong same-store sales.
Net income for the quarter was $18.3 million, or $0.24 per diluted share, compared to net income
of $10.6 million, or
$0.14 per diluted share, in the first
quarter of the prior year. All references to shares
outstanding and per-share amounts reflect a two-for-one stock split
that was effective on September 2,
2010.
The Company opened 26 stores in the first quarter compared to
opening 19 stores and closing one store in the prior year's first
quarter.
Jim Wright, Chairman and Chief
Executive Officer, stated, "We are delighted with our record first
quarter results and start to 2011 as we continue to experience
broad-based strength across the organization. As a result, we
achieved our fourth consecutive quarter of double-digit sales and
earnings growth. We enhanced our merchandise management
across categories and regions, maintained a prudent approach to
expenses, and experienced greater productivity from new stores.
Through great planning and execution, we believe we are
well-positioned for the important spring selling season."
Company Outlook
Based on strong performance in the first quarter, the Company
raised its financial expectations for fiscal 2011. Net sales
are anticipated to range from $4.04 billion
to $4.11 billion compared to the Company's previously
expected range of $4.00 billion to $4.07
billion. Same store sales for the year are now
expected to increase 3.5% to 5.0% compared to the original
expectation of an increase of 2.5% to 4.5%. The Company now
anticipates net income to range from $2.62
to $2.70 per diluted share compared to its previous guidance
of $2.54 to $2.62 per diluted
share.
Mr. Wright concluded, "With a solid start to this year, we are
confident we are taking the right steps to grow and improve the
Company. We are building on our momentum while executing
against our plans and investing in the business, which we believe
will enable us to continue delivering sustainable growth. We
are driving our top-line through key merchandising initiatives
while also enhancing gross margin through inventory management,
strategic sourcing, private brands and price optimization.
Our balance sheet remains strong and we look forward to
another successful year."
Conference Call Information
Tractor Supply Company will be hosting a conference call at
5:00 p.m. Eastern Time today to
discuss the quarterly results. The call will be broadcast
simultaneously over the Internet on the Company's homepage at
TractorSupply.com and can be accessed under the link
"Investor Relations." The webcast will be archived
shortly after the conference call concludes through May 4, 2011.
About Tractor Supply Company
At March 26, 2011, Tractor Supply
Company operated 1,027 stores in 44 states. The Company's stores
are focused on supplying the lifestyle needs of recreational
farmers and ranchers. The Company also serves the maintenance
needs of those who enjoy the rural lifestyle, as well as tradesmen
and small businesses. Stores are located in towns outlying
major metropolitan markets and in rural communities. The
Company offers the following comprehensive selection of
merchandise: (1) equine, pet and small animal products,
including items necessary for their health, care, growth and
containment; (2) hardware, truck, towing and tool products;
(3) seasonal products, including lawn and garden items, power
equipment, gifts and toys; (4) maintenance products for
agricultural and rural use; and (5) work/recreational clothing
and footwear.
Forward Looking Statements:
As with any business, all phases of the Company's operations are
subject to influences outside its control. This information
contains certain forward-looking statements, including statements
regarding estimated results of operations in future periods.
These forward-looking statements are subject to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995 and 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. These factors include general economic conditions
affecting consumer spending, the timing and acceptance of new
products in the stores, the mix of goods sold, purchase price
volatility (including inflationary and deflationary pressures), the
ability to increase sales at existing stores, the ability to manage
growth and identify suitable locations and negotiate favorable
lease agreements on new and relocated stores, the ability to manage
expenses, the availability of favorable credit sources, capital
market conditions in general, failure to open new stores in the
manner currently contemplated, the impact of new stores on our
business, competition, weather conditions, the seasonal nature of
our business, effective merchandising initiatives and marketing
emphasis, the ability to retain vendors, reliance on foreign
suppliers, the ability to attract, train and retain qualified
employees, product liability and other claims, on-going and
potential legal or regulatory proceedings, management of our
information systems, effective tax rate changes and results of
examination by taxing authorities and the ability to maintain an
effective system of internal control over financial reporting.
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.
(Financial
tables to follow)
Consolidated
Statements of Income
(Unaudited)
(in
thousands, except per share amounts)
|
|
|
FIRST
QUARTER ENDED
|
|
|
March 26,
2011
|
|
March 27,
2010
|
|
|
|
%
of
Sales
|
|
|
%
of
Sales
|
|
Net sales
|
$ 836,576
|
100.0%
|
|
$ 710,917
|
100.0%
|
|
Cost of merchandise
sold
|
562,970
|
67.3
|
|
479,986
|
67.5
|
|
Gross
margin
|
273,606
|
32.7
|
|
230,931
|
32.5
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
226,575
|
27.1
|
|
197,810
|
27.8
|
|
Depreciation and
amortization
|
18,265
|
2.2
|
|
16,654
|
2.4
|
|
|
|
|
|
|
|
|
Income from
operations
|
28,766
|
3.4
|
|
16,467
|
2.3
|
|
Interest expense, net
|
243
|
0.0
|
|
318
|
0.0
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
28,523
|
3.4
|
|
16,149
|
2.3
|
|
Income tax expense
|
10,188
|
1.2
|
|
5,567
|
0.8
|
|
Net income
|
$
18,335
|
2.2%
|
|
$
10,582
|
1.5%
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
Basic
|
$
0.25
|
|
|
$
0.15
|
|
|
Diluted
|
$
0.24
|
|
|
$
0.14
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (000's):
|
|
|
|
|
|
|
Basic
|
72,704
|
|
|
72,309
|
|
|
Diluted
|
74,927
|
|
|
74,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
(Unaudited)
(in
thousands)
|
|
|
March 26,
2011
|
|
March 27,
2010*
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash
and cash equivalents
|
$
140,448
|
|
$
138,060
|
|
Short-term investments
|
15,913
|
|
--
|
|
Inventories
|
941,377
|
|
832,881
|
|
Prepaid expenses and other current assets
|
40,698
|
|
38,772
|
|
Total current assets
|
1,138,436
|
|
1,009,713
|
|
|
|
|
|
|
Property and equipment,
net
|
413,818
|
|
365,838
|
|
Goodwill
|
10,258
|
|
10,258
|
|
Deferred income taxes
|
2,780
|
|
13,674
|
|
Other assets
|
11,861
|
|
4,856
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
1,577,153
|
|
$
1,404,339
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
406,408
|
|
$
394,955
|
|
Accrued employee compensation
|
17,021
|
|
12,604
|
|
Other
accrued expenses
|
122,442
|
|
90,291
|
|
Current portion of capital lease obligations
|
58
|
|
360
|
|
Income taxes payable
|
--
|
|
308
|
|
Deferred income taxes
|
14,287
|
|
16,930
|
|
Total current liabilities
|
560,216
|
|
515,448
|
|
|
|
|
|
|
Revolving credit loan
|
--
|
|
--
|
|
Capital lease
obligations
|
1,302
|
|
1,324
|
|
Deferred rent
|
71,704
|
|
64,350
|
|
Other long-term
liabilities
|
31,825
|
|
30,819
|
|
Total liabilities
|
665,047
|
|
611,941
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
636
|
|
624
|
|
Additional paid-in capital
|
254,064
|
|
202,186
|
|
Treasury stock
|
(310,522)
|
|
(223,007)
|
|
Retained earnings
|
967,928
|
|
812,595
|
|
Total stockholders' equity
|
912,106
|
|
792,398
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
1,577,153
|
|
$
1,404,339
|
|
|
|
|
|
|
* 2010 amounts adjusted to
reflect the change in inventory accounting method from LIFO to
average cost.
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
(Unaudited)
(in
thousands)
|
|
|
FIRST
QUARTER ENDED
|
|
|
March 26,
2011
|
|
March 27,
2010*
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net
income
|
$ 18,335
|
|
$ 10,582
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
Depreciation and amortization
|
18,265
|
|
16,654
|
|
Loss
on sale of property and equipment
|
45
|
|
407
|
|
Stock
compensation expense
|
3,612
|
|
3,154
|
|
Deferred income taxes
|
8,403
|
|
2,842
|
|
Change in assets and liabilities:
|
|
|
|
|
Inventories
|
(204,857)
|
|
(156,415)
|
|
Prepaid expenses and other current assets
|
(6,753)
|
|
(8,028)
|
|
Accounts payable
|
159,020
|
|
133,320
|
|
Accrued employee compensation
|
(17,555)
|
|
(10,121)
|
|
Other accrued expenses
|
(12,366)
|
|
(10,404)
|
|
Income taxes payable
|
(8,269)
|
|
(6,957)
|
|
Other
|
(2,681)
|
|
3,991
|
|
|
|
|
|
|
Net cash used in operating activities
|
(44,801)
|
|
(20,975)
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Capital
expenditures
|
(28,905)
|
|
(12,940)
|
|
Proceeds from sale
of property and equipment
|
56
|
|
288
|
|
|
|
|
|
|
Net cash used in investing activities
|
(28,849)
|
|
(12,652)
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Borrowings under
revolving credit agreement
|
--
|
|
142
|
|
Repayments under
revolving credit agreement
|
--
|
|
(142)
|
|
Excess tax benefit
of stock options exercised
|
4,830
|
|
2,298
|
|
Principal payments
under capital lease obligations
|
(47)
|
|
(115)
|
|
Restricted stock
units withheld to satisfy tax obligations
|
(872)
|
|
(657)
|
|
Repurchase of
common stock
|
(53,146)
|
|
(3,803)
|
|
Net proceeds from
issuance of common stock
|
11,105
|
|
6,187
|
|
Cash dividends paid
to stockholders
|
(5,111)
|
|
(5,074)
|
|
|
|
|
|
|
Net cash used in financing activities
|
(43,241)
|
|
(1,164)
|
|
|
|
|
|
|
Net decrease in cash and
equivalents
|
(116,891)
|
|
(34,791)
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period
|
257,339
|
|
172,851
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
$
140,448
|
|
$
138,060
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information:
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
Interest
|
$
33
|
|
$
36
|
|
Income
taxes
|
8,253
|
|
6,764
|
|
|
|
|
|
|
* 2010 amounts adjusted to
reflect the change in inventory accounting method from LIFO to
average cost. Additionally, reclassified certain amounts
within cash flows from operating activities to conform to the
current period presentation.
|
|
|
|
|
|
|
|
Selected
Financial and Operating Information
|
|
|
FIRST
QUARTER ENDED
|
|
|
March 26,
2011
|
|
March 27,
2010
|
|
|
(unaudited)
|
|
Sales
Information:
|
|
|
|
|
Same-store sales
increase
|
10.7%
|
|
2.8%
|
|
Non-comp sales (% of total
sales)
|
5.9%
|
|
6.0%
|
|
|
|
|
|
|
Average transaction
value
|
$ 39.56
|
|
$ 38.59
|
|
Comp average transaction/value
increase (decrease)
|
2.3%
|
|
(4.2)%
|
|
Comp average transaction count
increase
|
8.2%
|
|
7.3%
|
|
|
|
|
|
|
Store Count
Information:
|
|
|
|
|
Beginning of
period
|
1,001
|
|
930
|
|
New
stores opened
|
26
|
|
19
|
|
Stores closed
|
--
|
|
(1)
|
|
End of
period
|
1,027
|
|
948
|
|
|
|
|
|
|
Relocated stores
|
--
|
|
--
|
|
|
|
|
|
|
Pre-opening costs
(000's)
|
$ 2,462
|
|
$ 2,193
|
|
|
|
|
|
|
Balance Sheet
Information:
|
|
|
|
|
Average inventory per store
(000's) (a)
|
$
878
|
|
$
850
|
|
Inventory turns
(annualized)
|
2.85
|
|
2.57
|
|
Financed inventory
(a)
|
47.7%
|
|
51.1%
|
|
Share repurchase
program:
|
|
|
|
|
Cost
(000's)
|
$ 53,146
|
|
$ 3,803
|
|
Average
purchase price per share (b)
|
52.54
|
|
26.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Assumes average
inventory cost, excluding inventory in transit.
|
|
(b) Reflects a split
effected purchase price.
|
|
|
|
|
|
|
|
|
SOURCE Tractor Supply Company