- Net Sales Increased 15.8%; Comparable Store Sales Increased
13.1% on Top of 26.8% Comparable Store Sales Growth Last
Year
- Diluted Earnings Per Share (“EPS”) Increased 20.4% to
$1.95
- Third Quarter 2021 Marks the Sixth Consecutive Quarter in
Which Comparable Store Sales Have Grown More Than 10%
- Company Raises Fiscal 2021 Guidance
Tractor Supply Company (NASDAQ: TSCO), the largest rural
lifestyle retailer in the United States, today reported financial
results for its third quarter ended September 25, 2021.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20211021005199/en/
“The third quarter marks our sixth consecutive quarter of
double-digit comparable store sales growth. We are once again very
pleased with the overall performance of our business, which
exceeded our expectations. Our outstanding results are indicative
of the hard work and dedication of the more than 45,000 Team
Members of Tractor Supply who are successfully navigating the
challenging and ever-changing external environment,” said Hal
Lawton, Tractor Supply’s President and Chief Executive Officer.
“Over 18 months into the pandemic, our business has never been
stronger. Our growth continues to be robust. Our customer trends
remain structurally sound. We are continuing to gain market share
and invest in the business to capture the significant opportunities
ahead of us. As we advance our multiyear Life Out Here Strategy, we
are beginning to realize the benefits from our strategic
initiatives. Despite unprecedented pressures across our supply
chain, we are raising our outlook for fiscal 2021 and are on track
for a record year of sales and earnings,” Lawton added.
Third Quarter 2021
Results
Net sales for the third quarter 2021 increased 15.8% to $3.02
billion from $2.61 billion in the third quarter of 2020. Comparable
store sales increased 13.1%, as compared to an increase of 26.8% in
the prior year’s third quarter. Comparable store sales for the
third quarter 2021 were driven by comparable average ticket growth
and comparable average transaction count growth of 9.5% and 3.6%,
respectively. The comparable store sales results were broad-based
and reflect robust demand for everyday merchandise, including
consumable, usable and edible (“C.U.E.”) products, and continued
growth in summer seasonal categories. All geographic regions and
major merchandising categories of the Company had comparable store
sales growth. In addition, the Company’s e-commerce sales
experienced strong double-digit growth for the 37th consecutive
quarter.
Gross profit increased 14.5% to $1.09 billion from $948.0
million in the prior year’s third quarter, and gross margin
decreased 41 basis points to 36.0% from 36.4% in the prior year’s
third quarter. The Company’s price management actions, primarily
due to inflationary cost pressures, and other margin driving
initiatives were able to offset most of the impact from significant
product cost inflation pressures, higher transportation costs and a
product mix shift towards C.U.E. categories.
Selling, general and administrative (“SG&A”) expenses,
including depreciation and amortization, increased 13.3% to $788.1
million from $695.8 million in the prior year’s third quarter. As a
percent of net sales, SG&A expenses improved 58 basis points to
26.1% from 26.7% in the third quarter of 2020. The improvement in
SG&A as a percent of net sales was primarily attributable to
leverage in occupancy and other fixed costs from the increase in
comparable store sales, lower COVID-19 pandemic response costs and
decreased incentive compensation. The leverage from these SG&A
expenses was partially offset by higher wage rates, additional
store labor hours, investments in the Company’s strategic
initiatives and other discrete costs specific to the current
operating environment.
Operating income increased 17.9% to $297.2 million compared to
$252.2 million in the third quarter of 2020.
The effective income tax rate was 22.9% compared to 22.2% in the
third quarter of 2020.
Net income increased 17.7% to $224.4 million from $190.6
million, and diluted earnings per share increased 20.4% to $1.95
from $1.62 in the third quarter of 2020.
The Company repurchased approximately 0.7 million shares of its
common stock for $141.3 million and paid quarterly cash dividends
totaling $59.4 million, returning $200.6 million of capital to
shareholders in the third quarter of 2021.
The Company opened 12 new Tractor Supply stores and three new
Petsense stores in the third quarter of 2021.
First Nine Months of Fiscal 2021
Results
Net sales for the first nine months of 2021 increased 21.6% to
$9.41 billion from $7.74 billion in the first nine months of 2020.
Comparable store sales increased 18.5% versus a 21.5% increase in
the first nine months of 2020.
Gross profit increased 21.4% to $3.36 billion from $2.77
billion, and gross margin was 35.7% in the first nine months of
2021 and 2020.
SG&A expenses, including depreciation and amortization,
increased 19.9% to $2.34 billion from $1.95 billion but decreased
as a percent of net sales to 24.9% compared to 25.2% for the first
nine months of 2020.
Operating income increased 24.8% to $1.01 billion compared to
$812.5 million in the first nine months of 2020.
The effective income tax rate was 21.9% compared to 22.6% in the
first nine months of 2020.
Net income increased 26.5% to $775.8 million from $613.1
million, and diluted earnings per share increased 27.7% to $6.68
from $5.23 for the first nine months of 2020.
Year to date through the third quarter, the Company has
repurchased approximately 3.5 million shares of its common stock
for $598.0 million. The Company has also paid quarterly cash
dividends totaling $179.8 million year to date, returning $777.8
million of capital to shareholders.
During the first nine months of 2021, the Company opened 44 new
Tractor Supply stores and six new Petsense stores and closed 11
Petsense stores.
Fiscal 2021 Financial
Outlook
The Company is updating its fiscal 2021 financial guidance to
reflect its strong performance year to date through the third
quarter of 2021 and based on what it can reasonably predict at this
time.
For fiscal 2021, the Company now expects the following:
Updated
Previous
Net Sales
~$12.6 billion
$12.1 billion - $12.3 billion
Comparable Store Sales
~+16%
+11% - +13%
Operating Margin Rate
10.2% - 10.3%
9.7% - 9.9%
Net Income
$972 million - $985 million
$895 million - $930 million
Earnings per Diluted Share
$8.40 - $8.50
$7.70 - $8.00
Effective Tax Rate
22.1% - 22.3%
22.1% - 22.4%
Capital Expenditures
$550 million - $600 million
$500 million - $600 million
Share Repurchases
$750 million - $800 million
$700 million - $800 million
Anticipated capital expenditures include new store growth of
approximately 80 new Tractor Supply and 10 new Petsense store
openings.
The Company continues to have a strong liquidity position with
current cash and cash equivalents of approximately $1.11 billion
and no amounts drawn on its $500 million revolving credit facility
as of September 25, 2021.
The Company’s outlook for fiscal 2021 does not contemplate the
impact of the pending acquisition of Orscheln Farm and Home
previously announced on February 17, 2021. The acquisition is
conditioned on the receipt of regulatory clearance and satisfactory
completion of customary closing conditions.
Conference Call
Information
Tractor Supply Company will hold a conference call today,
Thursday, October 21, 2021 at 9:00 a.m. CT / 10:00 a.m. ET, hosted
by Hal Lawton, President and Chief Executive Officer, and Kurt
Barton, Chief Financial Officer. 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
Tractor Supply Company (NASDAQ: TSCO), the largest rural
lifestyle retailer in the United States, has been passionate about
serving its unique niche, targeting the needs of recreational
farmers, ranchers and all those who enjoy living the rural
lifestyle, for more than 80 years. Tractor Supply offers an
extensive mix of products necessary to care for home, land, pets
and animals with a focus on product localization, exclusive brands
and legendary customer service for the Out Here lifestyle. With
more than 45,000 Team Members, the Company’s physical store assets,
combined with its digital capabilities, offer customers the
convenience of purchasing products they need anytime, anywhere and
any way they choose at the everyday low prices they deserve. At
September 25, 2021, the Company operated 1,967 Tractor Supply
stores in 49 states, a consumer mobile app and an e-commerce
website at www.TractorSupply.com.
Tractor Supply Company also owns and operates Petsense, a
small-box pet specialty supply retailer focused on meeting the
needs of pet owners, primarily in small and mid-size communities,
and offering a variety of pet products and services. At September
25, 2021, the Company operated 177 Petsense stores in 23 states.
For more information on Petsense, visit www.Petsense.com.
Forward-Looking
Statements
As with any business, all phases of the Company’s operations are
subject to influences outside its control. This press release
contains certain forward-looking statements, including statements
regarding sales and earnings growth, long-term financial growth
rate targets, tax rates, share repurchases, new store growth,
estimated results of operations, including, but not limited to,
sales, comparable store sales, operating margins, net income,
earnings per share, and capital expenditures. Factors affecting
future results include the timing of normalized macroeconomic
conditions from the impacts of the COVID-19 pandemic, the Company’s
ability to predict the timing of normalized macroeconomic
conditions, the timing and amount of share repurchases, marketing,
merchandising and strategic initiatives and new store and
distribution center openings and expenses in future periods,
including incremental costs associated with COVID-19. All
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, without limitation, national, regional and local
economic conditions affecting consumer spending, including the
effects of COVID-19, the effects that “shelter in place” or other
similar mandated or suggested social distancing protocols could
have on the business, the costs of doing business as a retailer
during the COVID-19 pandemic, the effectiveness of the Company’s
responses to COVID-19 and customer response with respect to those
actions, the effects of COVID-19 on our suppliers, business
partners and supply chain, the timing and acceptance of new
products, the timing and mix of goods sold, weather conditions, the
seasonal nature of the business, transportation costs, including
but not limited to, carrier rates, fuel costs and other pressures
across our supply chain, 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, the possibility that the acquisition of
Orscheln Farm and Home (the “Transaction”) will not close or that
the closing may be delayed, the possibility that we may be unable
to obtain regulatory clearance for the Transaction, the potential
for litigation or governmental investigations relating to the
Transaction, the occurrence of events, changes or circumstances
that could give rise to the termination of the definitive agreement
for the Transaction, the risk that we may be unable to successfully
integrate any acquired business or that we may not realize the
benefits expected from an acquisition, including the Transaction,
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement of
an acquisition, including the Transaction, failure of an
acquisition to produce anticipated results, the ability to
successfully manage expenses, particularly in light of COVID-19,
including but not limited to, increases in wages, and execute key
gross margin enhancing initiatives, the availability of favorable
credit sources, capital market conditions in general, the ability
to open new stores in the manner, timing and number currently
contemplated, the impact of new stores on the business,
competition, including competition from online retailers, effective
merchandising initiatives and marketing emphasis, the ability to
retain vendors, reliance on foreign suppliers, the ability to
attract, train and retain qualified employees, our ability to meet
our sustainability, stewardship, carbon emission and DE&I
related ESG projections, goals and commitments, product liability
and other claims, changes in federal, state or local regulations,
potential judgments, fines, legal fees and other costs, breach of
information systems or theft of employee or customer data, ongoing
and potential future legal or regulatory proceedings, management of
the Company’s information systems, failure to develop and implement
new technologies, the failure of customer-facing technology
systems, business disruption including from the implementation of
supply chain technologies, effective tax rate changes, including
expected effects of the Tax Cuts and Jobs Act, and results of
examination by taxing authorities, the imposition of tariffs on
imported products or the disallowance of tax deductions on imported
products, the ability to maintain an effective system of internal
control over financial reporting, and changes in accounting
standards, assumptions and estimates. 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 amounts)
Third Quarter Ended
Nine Months Ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
% of
% of
% of
% of
Net
Net
Net
Net
Sales
Sales
Sales
Sales
Net sales
$
3,017,926
100.00%
$
2,606,572
100.00%
$
9,411,821
100.00%
$
7,742,087
100.00%
Cost of merchandise sold
1,932,616
64.04
1,658,615
63.63
6,055,246
64.34
4,976,068
64.27
Gross profit
1,085,310
35.96
947,957
36.37
3,356,575
35.66
2,766,019
35.73
Selling, general and administrative
expenses
718,261
23.80
641,129
24.59
2,148,200
22.82
1,794,924
23.18
Depreciation and amortization
69,824
2.31
54,651
2.10
194,731
2.07
158,634
2.05
Operating income
297,225
9.85
252,177
9.68
1,013,644
10.77
812,461
10.50
Interest expense, net
6,146
0.20
7,208
0.28
20,068
0.21
20,695
0.27
Income before income taxes
291,079
9.65
244,969
9.40
993,576
10.56
791,766
10.23
Income tax expense
66,679
2.21
54,359
2.09
217,800
2.32
178,701
2.31
Net income
$
224,400
7.44%
$
190,610
7.31%
$
775,776
8.24%
$
613,065
7.92%
Net income per share:
Basic
$
1.96
$
1.64
$
6.74
$
5.27
Diluted
$
1.95
$
1.62
$
6.68
$
5.23
Weighted average shares
outstanding:
Basic
114,223
116,339
115,170
116,330
Diluted
115,193
117,745
116,170
117,330
Dividends declared per common share
outstanding
$
0.52
$
0.40
$
1.56
$
1.10
Condensed Consolidated Statements of Comprehensive
Income
(Unaudited)
(in thousands)
Third Quarter Ended
Nine Months Ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Net income
$
224,400
$
190,610
$
775,776
$
613,065
Other comprehensive income/(loss):
Change in fair value of interest rate
swaps, net of taxes
206
468
2,651
(6,066)
Total other comprehensive
income/(loss)
206
468
2,651
(6,066)
Total comprehensive income
$
224,606
$
191,078
$
778,427
$
606,999
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
September 25,
2021
September 26,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,111,711
$
1,111,986
Inventories
2,199,773
1,915,040
Prepaid expenses and other current
assets
149,550
136,098
Income taxes receivable
6,827
7,838
Total current assets
3,467,861
3,170,962
Property and equipment, net
1,441,704
1,178,625
Operating lease right-of-use assets
2,725,510
2,354,196
Goodwill and other intangible assets
55,520
124,492
Deferred income taxes
16,590
3,581
Other assets
38,009
28,941
Total assets
$
7,745,194
$
6,860,797
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,197,813
$
1,056,911
Accrued employee compensation
122,007
120,361
Other accrued expenses
408,887
274,244
Current portion of long-term debt
—
380,000
Current portion of finance lease
liabilities
4,242
4,407
Current portion of operating lease
liabilities
312,296
294,826
Income taxes payable
762
1,914
Total current liabilities
2,046,007
2,132,663
Long-term debt
985,867
529,264
Finance lease liabilities, less current
portion
30,041
32,948
Operating lease liabilities, less current
portion
2,536,875
2,171,773
Other long-term liabilities
125,651
118,283
Total liabilities
5,724,441
4,984,931
Stockholders’ equity:
Common stock
1,410
1,398
Additional paid-in capital
1,191,785
1,059,687
Treasury stock
(3,954,926)
(3,277,215)
Accumulated other comprehensive loss
(592)
(5,867)
Retained earnings
4,783,076
4,097,863
Total stockholders’ equity
2,020,753
1,875,866
Total liabilities and stockholders’
equity
$
7,745,194
$
6,860,797
Condensed Consolidated Statements of Cash
Flows
(Unaudited)
(in thousands)
Nine Months Ended
September 25,
2021
September 26,
2020
Cash flows from operating
activities:
Net income
$
775,776
$
613,065
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
194,731
158,634
Loss/(gain) on disposition of property and
equipment
3,295
(774)
Share-based compensation expense
35,737
26,977
Deferred income taxes
14,996
(3,734)
Change in assets and liabilities:
Inventories
(416,503)
(312,259)
Prepaid expenses and other current
assets
(15,891)
(35,233)
Accounts payable
221,717
413,875
Accrued employee compensation
2,306
80,606
Other accrued expenses
74,680
20,279
Income taxes
(26,003)
(11,908)
Other
6,996
55,447
Net cash provided by operating
activities
871,837
1,004,975
Cash flows from investing
activities:
Capital expenditures
(382,358)
(161,292)
Proceeds from sale of property and
equipment
1,094
1,130
Net cash used in investing activities
(381,264)
(160,162)
Cash flows from financing
activities:
Borrowings under debt facilities
—
1,159,000
Repayments under debt facilities
—
(646,500)
Debt discounts and issuance costs
—
(1,237)
Principal payments under finance lease
liabilities
(3,367)
(3,098)
Repurchase of shares to satisfy tax
obligations
(14,636)
(7,732)
Repurchase of common stock
(597,973)
(263,219)
Net proceeds from issuance of common
stock
75,193
73,753
Cash dividends paid to stockholders
(179,835)
(128,035)
Net cash (used in)/provided by financing
activities
(720,618)
182,932
Net change in cash and cash
equivalents
(230,045)
1,027,745
Cash and cash equivalents at beginning of
period
1,341,756
84,241
Cash and cash equivalents at end of
period
$
1,111,711
$
1,111,986
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest
$
16,008
$
18,304
Income taxes
229,122
191,743
Supplemental disclosures of non-cash
activities:
Non-cash accruals for property and
equipment
$
22,036
$
14,199
Increase of operating lease assets and
liabilities from new or modified leases
534,222
381,486
Increase of finance lease assets and
liabilities from new or modified leases
—
6,028
Selected
Financial and Operating Information
(Unaudited)
Third Quarter Ended
Nine Months Ended
September 25,
2021
September 26,
2020
September 25,
2021
September 26,
2020
Sales Information:
Comparable store sales increase
13.1
%
26.8
%
18.5
%
21.5
%
New store sales (% of total sales)
2.3
%
3.6
%
2.7
%
3.4
%
Average transaction value
$55.50
$50.88
$56.02
$51.47
Comparable store average transaction value
increase (a)
9.5
%
12.5
%
9.7
%
12.0
%
Comparable store average transaction count
increase
3.6
%
14.3
%
8.8
%
9.6
%
Total selling square footage (000's)
32,862
31,836
32,862
31,836
Exclusive brands (% of total sales)
28.1
%
28.5
%
29.0
%
28.9
%
Imports (% of total sales)
10.5
%
9.7
%
11.4
%
10.4
%
Store Count Information:
Tractor Supply
Beginning of period
1,955
1,881
1,923
1,844
New stores opened
12
23
44
61
Stores closed
—
—
—
(1
)
End of period
1,967
1,904
1,967
1,904
Petsense
Beginning of period
174
180
182
180
New stores opened
3
3
6
6
Stores closed
—
—
(11
)
(3
)
End of period
177
183
177
183
Consolidated end of period
2,144
2,087
2,144
2,087
Pre-opening costs (000’s)
$2,716
$3,033
$6,210
$7,581
Balance Sheet Information:
Average inventory per store (000’s)
(b)
$930.7
$833.0
$930.7
$833.0
Inventory turns (annualized)
3.92
3.91
4.22
3.87
Share repurchase program:
Cost (000’s)
$141,259
$—
$597,973
$263,219
Average purchase price per share
$190.03
$—
$172.73
$92.28
Capital Expenditures (in
millions):
Existing stores
$93.1
$14.6
$213.2
$30.6
Information technology
25.2
36.6
77.0
72.6
New and relocated stores and stores not
yet opened
17.8
16.7
46.5
43.8
Distribution center capacity and
improvements
25.1
5.6
36.9
11.6
Corporate and other
5.2
1.2
8.8
2.7
Total
$166.4
$74.7
$382.4
$161.3
(a) Comparable store average transaction
value increase includes the impact of transaction value growth
achieved on the current period growth in transaction count.
(b) Assumes average inventory cost,
excluding inventory in transit.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211021005199/en/
Tractor Supply Company Mary Winn Pilkington (615)
440-4212 Marianne Denenberg (615) 440-4345
Tractor Supply (NASDAQ:TSCO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tractor Supply (NASDAQ:TSCO)
Historical Stock Chart
From Sep 2023 to Sep 2024