BRENTWOOD, Tenn., Oct. 19, 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 third fiscal quarter ended
September 24, 2011.
Third Quarter Results
Net sales increased 17.9% to $977.8
million from $829.1 million in
the prior year's third quarter. Same-store sales increased
11.5% compared to a 5.0% increase in the prior-year period.
The same-store sales increase was driven by continued strong
results in core consumable, usable and edible (C.U.E.) products,
principally animal- and pet-related merchandise; seasonal heating
products and emergency response merchandise related to Hurricane
Irene. Additionally, same-store sales were favorably impacted
by higher selling prices due to inflation in key C.U.E.
categories.
Gross margin increased 18.8% to $327.6
million, or 33.5% of sales, compared to $275.7 million, or 33.2% of sales, in the prior
year's third quarter. The increase in gross margin reflects
improved direct product margin, partially offset by increased
transportation costs and product mix. 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 26.5% of sales compared
to 27.5% of sales in the prior year's third quarter. The
improvement as a percent of sales was primarily attributable to
strong same-store sales and expense control with respect to store
operating costs.
Net income for the quarter was $42.7 million, or $0.58 per diluted share, compared to net income
of $29.9 million, or
$0.40 per diluted share, in the third
quarter of the prior year.
The Company opened 12 stores, relocated one store and closed one
store compared to opening nine stores in the prior year's third
quarter.
Jim Wright, Chairman and Chief
Executive Officer, stated, "During the third quarter, we generated
double-digit increases in both sales and earnings on top of last
year's record results while improving gross margin and leveraging
SG&A costs. This strong performance, which also included
positive ticket and traffic, reflects the impact of our strategic
initiatives and our ability to respond to our customers' everyday
rural lifestyle needs. Additionally, we executed exceptionally well
and successfully managed through the inflationary environment.
We are delighted that we continue to experience broad-based
strength across the business."
First Nine Months Results
Net sales increased 14.9% to $2.99 billion from $2.61 billion in the first nine months of 2010.
Same-store sales increased 8.5% compared to a 4.8% increase
in the first nine months of 2010. Gross margin increased
15.8% to $1.00 billion, or 33.5%
of sales, compared to $866.7 million,
or 33.3% of sales, in the first nine months of 2010.
Selling, general and administrative expenses, including
depreciation and amortization, increased 12.3% to $762.5 million, or 25.5% of sales, compared to
$679.2 million, or 26.1% of sales,
for the first nine months of 2010.
Net income was $152.2 million, or $2.05 per diluted share, compared to net income
of $117.8 million, or
$1.58 per diluted share, for the
first nine months of 2010.
The Company opened 54 new stores, relocated two stores and
closed one store compared to 47 new store openings and one store
closure during the first nine months of 2010.
Company Outlook
Based on strong performance in the third quarter, the Company
raised its financial expectations for fiscal 2011. Net sales
are expected to range between $4.15 billion
and $4.17 billion compared to the Company's previously
expected range of $4.10 billion to $4.14
billion. Same-store sales for the year are now
expected to increase 6.5% to 7.0% compared to the prior expectation
for an increase of 5.0% to 6.0%. The Company now anticipates
net income will range between $2.85 and
$2.89 per diluted share compared to its previous guidance of
$2.75 to $2.82 per diluted share.
Mr. Wright concluded, "Our track record of consistently
generating strong results demonstrates that we are benefiting from
our strategic initiatives which, collectively, have strengthened
the structural foundation of the Tractor Supply Company business
and brand. As we look ahead, we are well-prepared for the upcoming
fall, winter and holiday selling season and believe that our
merchandising and marketing initiatives will allow us to gain
market share. With the right strategies, capital structure
and team in place, we are confident in our outlook for 2011 and our
ability to continue to build on our momentum for the
long-term."
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 and will be available
through November 2, 2011.
About Tractor Supply Company
At September 24, 2011, Tractor
Supply Company operated 1,054 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)
|
|
|
THIRD
QUARTER ENDED
|
|
NINE MONTHS
ENDED
|
|
|
September
24, 2011
|
|
September
25, 2010*
|
|
September
24, 2011
|
|
September
25, 2010*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
|
Sales
|
|
|
|
Sales
|
|
|
|
Sales
|
|
|
|
Sales
|
|
Net sales
|
$ 977,776
|
|
100.0%
|
|
$ 829,114
|
|
100.0%
|
|
$ 2,992,715
|
|
100.0%
|
|
$ 2,605,687
|
|
100.0%
|
|
Cost of merchandise
sold
|
650,173
|
|
66.5
|
|
553,426
|
|
66.8
|
|
1,989,009
|
|
66.5
|
|
1,738,939
|
|
66.7
|
|
Gross margin
|
327,603
|
|
33.5
|
|
275,688
|
|
33.2
|
|
1,003,706
|
|
33.5
|
|
866,748
|
|
33.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
239,883
|
|
24.5
|
|
210,779
|
|
25.4
|
|
705,863
|
|
23.6
|
|
627,913
|
|
24.1
|
|
Depreciation and
amortization
|
19,591
|
|
2.0
|
|
17,502
|
|
2.1
|
|
56,685
|
|
1.9
|
|
51,313
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
68,129
|
|
7.0
|
|
47,407
|
|
5.7
|
|
241,158
|
|
8.0
|
|
187,522
|
|
7.2
|
|
Interest expense,
net
|
591
|
|
0.1
|
|
38
|
|
--
|
|
1,051
|
|
--
|
|
597
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
67,538
|
|
6.9
|
|
47,369
|
|
5.7
|
|
240,107
|
|
8.0
|
|
186,925
|
|
7.2
|
|
Income tax
expense
|
24,805
|
|
2.5
|
|
17,506
|
|
2.1
|
|
87,879
|
|
2.9
|
|
69,162
|
|
2.7
|
|
Net income
|
$
42,733
|
|
4.4%
|
|
$
29,863
|
|
3.6%
|
|
$
152,228
|
|
5.1%
|
|
$
117,763
|
|
4.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
0.60
|
|
|
|
$
0.41
|
|
|
|
$
2.11
|
|
|
|
$
1.62
|
|
|
|
Diluted
|
$
0.58
|
|
|
|
$
0.40
|
|
|
|
$
2.05
|
|
|
|
$
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (000's):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
71,226
|
|
|
|
72,600
|
|
|
|
71,988
|
|
|
|
72,525
|
|
|
|
Diluted
|
73,343
|
|
|
|
74,932
|
|
|
|
74,158
|
|
|
|
74,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common
share outstanding
|
$
0.12
|
|
|
|
$
0.07
|
|
|
|
$
0.31
|
|
|
|
$
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 2010 amounts
adjusted to reflect the change in inventory accounting method from
LIFO to average cost.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
(Unaudited)
(in
thousands)
|
|
|
September
24, 2011
|
|
September
25, 2010*
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 96,590
|
|
$ 170,920
|
|
Restricted cash
|
21,870
|
|
--
|
|
Short-term
investments
|
--
|
|
15,913
|
|
Inventories
|
913,738
|
|
833,821
|
|
Prepaid expenses and other
current assets
|
40,198
|
|
50,926
|
|
Total
current assets
|
1,072,396
|
|
1,071,580
|
|
|
|
|
|
|
Property and equipment,
net
|
450,449
|
|
385,223
|
|
Goodwill
|
10,258
|
|
10,258
|
|
Deferred income taxes
|
2,112
|
|
13,210
|
|
Other assets
|
12,635
|
|
7,697
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
1,547,850
|
|
$
1,487,968
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts
payable
|
$ 340,208
|
|
$ 348,610
|
|
Accrued employee
compensation
|
36,823
|
|
30,041
|
|
Other accrued
expenses
|
119,588
|
|
104,164
|
|
Current portion of capital
lease obligations
|
32
|
|
344
|
|
Income taxes
payable
|
2,850
|
|
--
|
|
Deferred income
taxes
|
3,314
|
|
13,816
|
|
Total
current liabilities
|
502,815
|
|
496,975
|
|
|
|
|
|
|
Capital lease
obligations
|
1,292
|
|
1,151
|
|
Deferred rent
|
73,091
|
|
67,567
|
|
Other long-term
liabilities
|
33,747
|
|
30,033
|
|
Total
liabilities
|
610,945
|
|
595,726
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
641
|
|
628
|
|
Additional paid-in
capital
|
281,101
|
|
224,113
|
|
Treasury stock
|
(429,469)
|
|
(242,096)
|
|
Retained
earnings
|
1,084,632
|
|
909,597
|
|
Total
stockholders' equity
|
936,905
|
|
892,242
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
1,547,850
|
|
$
1,487,968
|
|
|
|
|
|
|
* 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
NINE MONTHS
ENDED
|
|
|
September
24,
2011
|
|
September
25,
2010*
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net income
|
$ 152,228
|
|
$ 117,763
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and
amortization
|
56,685
|
|
51,313
|
|
Loss on disposal of
property and equipment
|
187
|
|
632
|
|
Stock compensation
expense
|
10,693
|
|
8,754
|
|
Deferred income
taxes
|
(1,902)
|
|
192
|
|
Change in assets and
liabilities:
|
|
|
|
|
Inventories
|
(177,218)
|
|
(157,355)
|
|
Prepaid
expenses and other current assets
|
(6,253)
|
|
(12,025)
|
|
Accounts
payable
|
92,820
|
|
86,975
|
|
Accrued
employee compensation
|
2,247
|
|
7,316
|
|
Other
accrued expenses
|
(12,561)
|
|
3,469
|
|
Income taxes
payable
|
(5,419)
|
|
(15,422)
|
|
Other
|
(175)
|
|
2,905
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
111,332
|
|
94,517
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Capital expenditures
|
(107,326)
|
|
(67,086)
|
|
Proceeds from sale of property
and equipment
|
721
|
|
292
|
|
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
|
(112,562)
|
|
(82,707)
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Excess tax benefit of stock
options exercised
|
11,902
|
|
6,993
|
|
Principal payments under capital
lease obligations
|
(83)
|
|
(304)
|
|
Restricted stock units withheld
to satisfy tax obligations
|
(981)
|
|
(657)
|
|
Repurchase of common
stock
|
(172,093)
|
|
(22,892)
|
|
Net proceeds from issuance of
common stock
|
24,036
|
|
18,372
|
|
Cash dividends paid to
stockholders
|
(22,300)
|
|
(15,253)
|
|
|
|
|
|
|
Net cash
used in financing activities
|
(159,519)
|
|
(13,741)
|
|
|
|
|
|
|
Net decrease in cash and
equivalents
|
(160,749)
|
|
(1,931)
|
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period
|
257,339
|
|
172,851
|
|
|
|
|
|
|
Cash and cash equivalents at end
of period
|
$
96,590
|
|
$
170,920
|
|
|
|
|
|
|
Supplemental disclosures of cash
flow information:
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
Interest
|
$ 565
|
|
$ 128
|
|
Income taxes
|
81,942
|
|
76,381
|
|
|
|
|
|
|
Non-cash accruals for
construction in progress
|
(4,763)
|
|
--
|
|
|
|
|
|
|
|
* 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
|
|
|
THIRD
QUARTER ENDED
|
NINE MONTHS
ENDED
|
|
|
September
24, 2011
|
September
25, 2010
|
September
24, 2011
|
September
25, 2010
|
|
|
(unaudited)
|
(unaudited)
|
|
Sales
Information:
|
|
|
|
|
|
Same-store sales
increase
|
11.5%
|
5.0%
|
8.5%
|
4.8%
|
|
Non-comp sales (% of total
sales)
|
5.4%
|
5.3%
|
5.6%
|
5.7%
|
|
|
|
|
|
|
|
Average transaction
value
|
$ 41.99
|
$ 39.75
|
$ 42.60
|
$ 41.35
|
|
Comp average transaction value
increase (decrease)
|
5.3%
|
(1.3)%
|
2.8%
|
(1.9)%
|
|
Comp average transaction count
increase
|
5.9%
|
6.3%
|
5.5%
|
6.8%
|
|
|
|
|
|
|
|
Store Count
Information:
|
|
|
|
|
|
Beginning of period
|
1,043
|
967
|
1,001
|
930
|
|
New stores
opened
|
12
|
9
|
54
|
47
|
|
Stores closed
|
(1)
|
--
|
(1)
|
(1)
|
|
End of period
|
1,054
|
976
|
1,054
|
976
|
|
|
|
|
|
|
|
Relocated
stores
|
1
|
--
|
2
|
--
|
|
|
|
|
|
|
|
Pre-opening costs
(000's)
|
$ 1,658
|
$ 1,551
|
$ 5,590
|
$ 5,220
|
|
|
|
|
|
|
|
Balance Sheet
Information:
|
|
|
|
|
|
Average inventory per store
(000's) (a)
|
$ 808.9
|
$ 795.9
|
$ 808.9
|
$ 795.9
|
|
Inventory turns
(annualized)
|
3.03
|
2.82
|
3.13
|
2.98
|
|
Financed inventory
(a)
|
35.4%
|
39.8%
|
35.4%
|
39.8%
|
|
Share repurchase
program:
|
|
|
|
|
|
Cost (000's)
|
$ 49,206
|
$ 9,196
|
$ 172,093
|
$ 22,892
|
|
Average
purchase price per share (b)
|
$ 61.12
|
$ 33.64
|
$ 58.11
|
$ 31.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Assumes average
inventory cost, excluding inventory in transit.
|
|
(b) Reflects a split
adjusted purchase price.
|
|
|
|
|
|
|
|
|
|
SOURCE Tractor Supply Company