BRENTWOOD, Tenn., July 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 second fiscal quarter ended
June 25, 2011.
Second Quarter Results
Net sales increased 10.6% to $1.18
billion from $1.07 billion in
the prior year's second quarter. Same-store sales increased
4.6%, compared to a 6.1% increase in the prior-year period.
The same-store sales increase was driven by continued strong
results in core consumable, usable and edible (CUE) products,
principally animal and pet-related merchandise.
Gross margin increased 11.8% to $402.5
million, or 34.1% of sales, compared to $360.1 million, or 33.8% of sales, in the prior
year's second quarter. The increase in gross margin reflects
improved direct product margin, partially offset by increased
transportation costs. Direct product margin increased as a
result of improved inventory management, strategic sourcing,
private branding, and pricing.
Selling, general and administrative expenses, including
depreciation and amortization, improved to 21.9% of sales for the
second quarter compared to 22.2% of sales in the prior year's
second quarter. The improvement as a percent of sales was
primarily attributable to strong same-store sales and expense
control with respect to advertising and store occupancy costs.
Net income for the quarter was $91.2 million, or $1.23 per diluted share, compared to net income
of $77.3 million, or
$1.04 per diluted share, in the
second 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 16 stores and relocated one store in the
second quarter compared to opening 19 stores in the prior year's
second quarter.
Jim Wright, Chairman and Chief
Executive Officer, stated, "Our ability to achieve record results,
despite unfavorable weather patterns, further demonstrates that the
structural changes we made to the business over the past few years
have been successful. Through excellent seasonal preparedness and
execution, we anticipated our customers' needs, maintained
appropriate in-stock positions and our customers responded
positively to our efforts. As a result, we experienced strong sales
and earnings growth, positive ticket and traffic, margin expansion
and SG&A leverage."
First Six Months Results
Net sales increased 13.4% to $2.01 billion from $1.78 billion in the first six months of 2010.
Same-store sales increased 7.0% compared to a 4.7% increase
in the first six months of 2010. Gross margin increased 14.4%
to $676.1 million, or 33.6% of
sales, compared to $591.1 million, or
33.3% of sales, in the first six months of 2010.
Selling, general and administrative expenses, including
depreciation and amortization, increased 11.6% to $503.1 million, or 25.0% of sales, compared to
$450.9 million, or 25.4% of sales,
for the first six months of 2010.
Net income was $109.5 million, or $1.47 per diluted share, compared to net income
of $87.9 million, or
$1.18 per diluted share, for the
first six months of 2010.
The Company opened 42 new stores and relocated one store in 2011
compared to 38 new store openings and one store closure during the
first six months of 2010.
Company Outlook
Based on strong performance in the second quarter, the Company
raised its financial expectations for fiscal 2011. Net sales
are anticipated to range between $4.10
billion to $4.14 billion compared to the Company's
previously expected range of $4.04 billion
to $4.11 billion. Same-store sales for the year are
now expected to increase 5% to 6% compared to the prior expectation
of an increase of 3.5% to 5.0%. The Company now anticipates
net income will range between $2.75 to
$2.82 per diluted share compared to its previous guidance of
$2.62 to $2.70 per diluted share.
Mr. Wright concluded, "As we look to the remainder of the year,
we are optimistic about the momentum we have generated in our
business. To continue growing, we remain focused on executing
the merchandise, marketing and operational plans that will enable
Tractor Supply Company to meet our customers' needs, expand
operating margins and improve our processes continuously.
Additionally, we will continue to invest in our stores and
infrastructure while delivering value to our shareholders."
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 August 3, 2011.
About Tractor Supply Company
At June 25, 2011, Tractor Supply
Company operated 1,043 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)
|
|
|
|
|
SECOND
QUARTER ENDED
|
|
SIX MONTHS
ENDED
|
|
|
June 25,
2011
|
|
June 26,
2010*
|
|
June 25,
2011
|
|
June 26,
2010*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
of
Sales
|
|
|
|
%
of
Sales
|
|
|
|
%
of
Sales
|
|
|
|
%
of
Sales
|
|
Net sales
|
$ 1,178,363
|
|
100.0%
|
|
$ 1,065,656
|
|
100.0%
|
|
$ 2,014,939
|
|
100.0%
|
|
$ 1,776,573
|
|
100.0%
|
|
Cost of merchandise
sold
|
775,866
|
|
65.9
|
|
705,527
|
|
66.2
|
|
1,338,836
|
|
66.4
|
|
1,185,513
|
|
66.7
|
|
Gross margin
|
402,497
|
|
34.1
|
|
360,129
|
|
33.8
|
|
676,103
|
|
33.6
|
|
591,060
|
|
33.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
239,405
|
|
20.3
|
|
219,324
|
|
20.6
|
|
465,980
|
|
23.1
|
|
417,134
|
|
23.5
|
|
Depreciation and
amortization
|
18,829
|
|
1.6
|
|
17,157
|
|
1.6
|
|
37,094
|
|
1.9
|
|
33,811
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
144,263
|
|
12.2
|
|
123,648
|
|
11.6
|
|
173,029
|
|
8.6
|
|
140,115
|
|
7.9
|
|
Interest expense,
net
|
217
|
|
--
|
|
241
|
|
--
|
|
460
|
|
--
|
|
559
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
144,046
|
|
12.2
|
|
123,407
|
|
11.6
|
|
172,569
|
|
8.6
|
|
139,556
|
|
7.9
|
|
Income tax
expense
|
52,886
|
|
4.5
|
|
46,089
|
|
4.3
|
|
63,074
|
|
3.2
|
|
51,656
|
|
2.9
|
|
Net income
|
$
91,160
|
|
7.7%
|
|
$
77,318
|
|
7.3%
|
|
$
109,495
|
|
5.4%
|
|
$
87,900
|
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
1.27
|
|
|
|
$
1.06
|
|
|
|
$
1.51
|
|
|
|
$
1.21
|
|
|
|
Diluted
|
$
1.23
|
|
|
|
$
1.04
|
|
|
|
$
1.47
|
|
|
|
$
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares
outstanding
(000's):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
72,007
|
|
|
|
72,665
|
|
|
|
72,368
|
|
|
|
72,487
|
|
|
|
Diluted
|
74,180
|
|
|
|
74,678
|
|
|
|
74,566
|
|
|
|
74,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*2010 amounts
adjusted to reflect the change in inventory accounting method from
LIFO to average cost.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
(Unaudited)
(in
thousands)
|
|
|
|
|
June 25,
2011
|
|
June 26,
2010*
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 185,517
|
|
$ 181,079
|
|
Restricted cash
|
21,870
|
|
--
|
|
Short-term
investments
|
--
|
|
15,913
|
|
Inventories
|
875,483
|
|
780,994
|
|
Prepaid expenses and other
current assets
|
46,363
|
|
40,253
|
|
Total
current assets
|
1,129,233
|
|
1,018,239
|
|
|
|
|
|
|
Property and equipment,
net
|
431,614
|
|
372,542
|
|
Goodwill
|
10,258
|
|
10,258
|
|
Deferred income taxes
|
--
|
|
17,837
|
|
Other assets
|
11,758
|
|
5,391
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
1,582,863
|
|
$
1,424,267
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts
payable
|
$ 351,763
|
|
$ 289,538
|
|
Accrued employee
compensation
|
19,317
|
|
15,584
|
|
Other accrued
expenses
|
114,879
|
|
94,813
|
|
Current portion of capital
lease obligations
|
33
|
|
344
|
|
Income taxes
payable
|
42,431
|
|
51,190
|
|
Deferred income
taxes
|
7,348
|
|
13,168
|
|
Total
current liabilities
|
535,771
|
|
464,637
|
|
|
|
|
|
|
Capital lease
obligations
|
1,300
|
|
1,238
|
|
Deferred income taxes
|
124
|
|
--
|
|
Deferred rent
|
72,301
|
|
66,385
|
|
Other long-term
liabilities
|
32,672
|
|
27,569
|
|
Total
liabilities
|
642,168
|
|
559,829
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
639
|
|
625
|
|
Additional paid-in
capital
|
269,864
|
|
211,893
|
|
Treasury stock
|
(380,249)
|
|
(232,900)
|
|
Retained
earnings
|
1,050,441
|
|
884,820
|
|
Total
stockholders' equity
|
940,695
|
|
864,438
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
1,582,863
|
|
$
1,424,267
|
|
|
|
|
|
|
*2010 amounts
adjusted to reflect the change in inventory accounting method from
LIFO to average cost.
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
(Unaudited)
(in
thousands)
|
|
|
|
|
FOR
THE
SIX MONTHS
ENDED
|
|
|
June 25,
2011
|
|
June 26,
2010*
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net income
|
$ 109,495
|
|
$ 87,900
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and
amortization
|
37,094
|
|
33,811
|
|
Loss on sale of property
and equipment
|
569
|
|
600
|
|
Stock compensation
expense
|
6,989
|
|
6,226
|
|
Deferred income
taxes
|
4,368
|
|
(5,083)
|
|
Change in assets and
liabilities:
|
|
|
|
|
Inventories
|
(138,963)
|
|
(104,528)
|
|
Prepaid
expenses and other current assets
|
(12,418)
|
|
(9,509)
|
|
Accounts
payable
|
104,375
|
|
27,903
|
|
Accrued
employee compensation
|
(15,259)
|
|
(7,141)
|
|
Other
accrued expenses
|
(11,931)
|
|
(5,882)
|
|
Income taxes
payable
|
34,162
|
|
43,925
|
|
Other
|
(1,120)
|
|
2,759
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
117,361
|
|
70,981
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Capital expenditures
|
(74,084)
|
|
(36,927)
|
|
Proceeds from sale of property
and equipment
|
138
|
|
290
|
|
Restricted cash
deposits
|
(21,870)
|
|
--
|
|
Purchases of short-term
investments
|
--
|
|
(15,913)
|
|
Proceeds from sale of short-term
investments
|
15,913
|
|
--
|
|
|
|
|
|
|
Net cash
used in investing activities
|
(79,903)
|
|
(52,550)
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Borrowings under revolving
credit agreement
|
--
|
|
253
|
|
Repayments under revolving
credit agreement
|
--
|
|
(253)
|
|
Excess tax benefit of stock
options exercised
|
8,897
|
|
2,597
|
|
Principal payments under capital
lease obligations
|
(74)
|
|
(217)
|
|
Restricted stock units withheld
to satisfy tax obligations
|
(981)
|
|
(657)
|
|
Repurchase of common
stock
|
(122,873)
|
|
(13,696)
|
|
Net proceeds from issuance of
common stock
|
19,509
|
|
11,937
|
|
Cash dividends paid to
stockholders
|
(13,758)
|
|
(10,167)
|
|
|
|
|
|
|
Net cash
used in financing activities
|
(109,280)
|
|
(10,203)
|
|
|
|
|
|
|
Net (decrease) increase in cash
and equivalents
|
(71,822)
|
|
8,228
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period
|
257,339
|
|
172,851
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
$
185,517
|
|
$
181,079
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information:
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
Interest
|
$ 214
|
|
$ 95
|
|
Income taxes
|
14,596
|
|
8,260
|
|
|
|
|
|
|
Non-cash accruals for
construction in progress
|
576
|
|
--
|
|
|
|
|
|
|
|
* 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
|
|
|
|
|
SECOND
QUARTER ENDED
|
SIX MONTHS
ENDED
|
|
|
June 25,
2011
|
June 26,
2010
|
June 25,
2011
|
June 26,
2010
|
|
|
(unaudited)
|
(unaudited)
|
|
Sales
Information:
|
|
|
|
|
|
Same-store sales
increase
|
4.6%
|
6.1%
|
7.0%
|
4.7%
|
|
Non-comp sales (% of total
sales)
|
5.4%
|
5.8%
|
5.6%
|
5.9%
|
|
|
|
|
|
|
|
Average transaction
value
|
$45.64
|
$44.88
|
$42.90
|
$42.13
|
|
Comp average transaction value
increase (decrease)
|
1.5%
|
(0.7)%
|
1.6%
|
(2.2)%
|
|
Comp average transaction count
increase
|
3.1%
|
6.9%
|
5.3%
|
7.1%
|
|
|
|
|
|
|
|
Store Count
Information:
|
|
|
|
|
|
Beginning of period
|
1,027
|
948
|
1,001
|
930
|
|
New stores
opened
|
16
|
19
|
42
|
38
|
|
Stores closed
|
--
|
--
|
--
|
(1)
|
|
End of period
|
1,043
|
967
|
1,043
|
967
|
|
|
|
|
|
|
|
Relocated
stores
|
1
|
--
|
1
|
--
|
|
|
|
|
|
|
|
Pre-opening costs
(000's)
|
$ 1,470
|
$ 1,476
|
$ 3,932
|
$ 3,669
|
|
|
|
|
|
|
|
Balance Sheet
Information:
|
|
|
|
|
|
Average inventory per store
(000's) (a)
|
$ 795.5
|
$ 781.9
|
$ 795.5
|
$ 781.9
|
|
Inventory turns
(annualized)
|
3.48
|
3.45
|
3.18
|
3.05
|
|
Financed inventory
(a)
|
40.6%
|
49.1%
|
40.6%
|
49.1%
|
|
Share repurchase
program:
|
|
|
|
|
|
Cost (000's)
|
$ 69,727
|
$ 9,893
|
$ 122,873
|
$ 13,696
|
|
Average
purchase price per share (b)
|
$60.90
|
$33.13
|
$56.98
|
$30.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Assumes
average inventory cost, excluding inventory in transit.
|
|
(b) Reflects a
split adjusted purchase price.
|
|
|
|
|
|
|
|
|
|
SOURCE Tractor Supply Company