Tractor Supply(TSCO) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Highlights Executive Summary Tractor Supply achieved expected Q1 2024 results with comparable store sales growth and strong earnings, demonstrating market share gains and confidence in the full-year outlook - Q1 2024 performance met expectations, with positive comparable store sales growth and strong profitability[2] - Business showed positive signs this quarter, including continued market share gains, increased transaction count, and strong sales of big-ticket items[2] - The company remains confident in its full-year 2024 outlook, citing a healthy and active customer base[2] Key Financial Performance Indicators Q1 2024 net sales grew 2.9% to $3.39 billion, comparable store sales increased 1.1%, gross margin improved 50 bps to 36.0%, and diluted EPS rose 10.9% to $1.83 Key Financial Performance Indicators | Metric | Q1 2024 | Q1 2023 | YoY Change | | :-------------------------------- | :---------- | :---------- | :----------- | | Net Sales | $3.39 billion | $3.30 billion | +2.9% | | Comparable Store Sales Growth | +1.1% | +2.1% | -1.0 pp | | Gross Profit | $1.22 billion | $1.17 billion | +4.4% | | Gross Margin | 36.0% | 35.5% | +50 bps | | Selling, General & Administrative Expenses (SG&A) | $957.7 million | $925.5 million | +3.5% | | SG&A as % of Net Sales | 28.2% | 28.1% | +16 bps | | Operating Income | $263.1 million | $244.4 million | +7.6% | | Effective Income Tax Rate | 21.1% | 21.0% | +0.1 pp | | Net Income | $198.2 million | $183.1 million | +8.2% | | Diluted Earnings Per Share (EPS) | $1.83 | $1.65 | +10.9% | - Comparable store sales growth was primarily driven by a 1.3% increase in comparable average transaction count, partially offset by a 0.2% decrease in comparable average ticket[3] - Gross margin improvement was mainly attributed to continuously lower transportation costs, disciplined product cost management, and the ongoing execution of everyday low-price strategies[4] - The company repurchased approximately 0.5 million shares of common stock for $117.4 million and paid $118.8 million in quarterly cash dividends, returning a total of $236.2 million to shareholders in Q1[9] Fiscal Year 2024 Financial Outlook Tractor Supply reaffirms FY2024 guidance with net sales projected between $14.7 billion and $15.1 billion, comparable store sales growth of -1.0% to +1.5%, and diluted EPS of $9.85 to $10.50 Fiscal Year 2024 Financial Outlook | Metric | Range | | :-------------------- | :-------------------- | | Net Sales | $14.7 billion to $15.1 billion | | Comparable Store Sales | (1.0%) to +1.5% | | Operating Margin | 9.7% to 10.1% | | Net Income | $1.06 billion to $1.13 billion | | Diluted Earnings Per Share | $9.85 to $10.50 | - 2024 capital plans include opening approximately 80 new Tractor Supply stores, continuing Project Fusion remodels and garden center transformations, opening the company's 10th distribution center, and opening 10 to 15 new Petsense by Tractor Supply stores[11] Detailed Financial Statements Consolidated Statements of Income Q1 2024 net sales reached $3.39 billion, gross profit was $1.22 billion (35.96% margin), operating income $263.1 million, net income $198.2 million, and diluted EPS $1.83 Consolidated Statements of Income | Metric | March 30, 2024 (Thousands of USD) | % of Net Sales | April 1, 2023 (Thousands of USD) | % of Net Sales | | :----------------------------------- | :------------- | :------------- | :------------ | :------------- | | Net Sales | 3,394,834 | 100.00% | 3,299,225 | 100.00% | | Cost of Merchandise Sold | 2,173,980 | 64.04% | 2,129,317 | 64.54% | | Gross Profit | 1,220,854 | 35.96% | 1,169,908 | 35.46% | | Selling, General & Administrative Expenses | 853,436 | 25.14% | 828,235 | 25.10% | | Depreciation and Amortization | 104,293 | 3.07% | 97,233 | 2.95% | | Operating Income | 263,125 | 7.75% | 244,440 | 7.41% | | Interest Expense, Net | 11,902 | 0.35% | 12,680 | 0.38% | | Income Before Income Taxes | 251,223 | 7.40% | 231,760 | 7.03% | | Income Tax Expense | 53,056 | 1.56% | 48,672 | 1.48% | | Net Income | 198,167 | 5.84% | 183,088 | 5.55% | | Diluted Earnings Per Share | 1.83 | | 1.65 | | Consolidated Statements of Comprehensive Income Q1 2024 total comprehensive income was $197.4 million, slightly below net income due to negative fair value changes in interest rate swaps Consolidated Statements of Comprehensive Income | Metric | March 30, 2024 (Thousands of USD) | April 1, 2023 (Thousands of USD) | | :------------------------------------------ | :------------- | :------------ | | Net Income | 198,167 | 183,088 | | Change in Fair Value of Interest Rate Swaps, Net of Tax | (731) | (1,837) | | Total Comprehensive Income | 197,436 | 181,251 | Consolidated Balance Sheets As of March 30, 2024, total assets increased to $9.55 billion, driven by property, equipment, ROU assets, and inventory, with total liabilities at $7.43 billion and equity at $2.12 billion Consolidated Balance Sheets | Metric | March 30, 2024 (Thousands of USD) | April 1, 2023 (Thousands of USD) | | :-------------------------------- | :--------------------- | :-------------------- | | Cash and Cash Equivalents | 264,085 | 190,078 | | Inventories | 3,048,719 | 3,030,712 | | Total Current Assets | 3,519,484 | 3,458,921 | | Property and Equipment, Net | 2,496,948 | 2,144,769 | | Operating Lease Right-of-Use Assets | 3,188,973 | 2,950,610 | | Total Assets | 9,554,954 | 8,848,815 | | Total Current Liabilities | 2,517,755 | 2,349,700 | | Long-Term Debt | 1,729,715 | 1,601,563 | | Total Liabilities | 7,430,943 | 6,934,269 | | Total Stockholders' Equity | 2,124,011 | 1,914,546 | Consolidated Statements of Cash Flows Q1 2024 net cash from operating activities significantly increased to $257.4 million, with investing activities using $152.3 million and financing activities using $238.1 million for buybacks and dividends Consolidated Statements of Cash Flows | Metric | March 30, 2024 (Thousands of USD) | April 1, 2023 (Thousands of USD) | | :------------------------------------ | :--------------------- | :-------------------- | | Net Cash Provided by Operating Activities | 257,408 | 19,554 | | Net Cash Used in Investing Activities | (152,256) | (157,684) | | Net Cash (Used in)/Provided by Financing Activities | (238,138) | 125,706 | | Net Decrease in Cash and Cash Equivalents | (132,986) | (12,424) | | Cash and Cash Equivalents, End of Period | 264,085 | 190,078 | - The significant increase in operating cash flow was primarily driven by an increase in accounts payable, reaching $335.9 million in Q1 2024 compared to $128.3 million in Q1 2023[25] - Capital expenditures in Q1 2024 were $157.2 million, largely consistent with $157.9 million in Q1 2023[25] Operational and Store Information Company Profile and Store Network Tractor Supply is the largest rural lifestyle retailer in the US, operating 2,233 Tractor Supply stores across 49 states and 202 Petsense stores in 23 states as of March 30, 2024 - Tractor Supply is the largest rural lifestyle retailer in the U.S., serving a broad customer base including hobby farmers, ranchers, homeowners, gardeners, and pet owners[14] Store Network | Store Type | Number of Stores (as of March 30, 2024) | States Covered | | :------------------------ | :-------------------------- | :------- | | Tractor Supply | 2,233 | 49 | | Petsense by Tractor Supply | 202 | 23 | | Consolidated Total | 2,435 | | Store Openings and Capital Allocation In Q1 2024, Tractor Supply opened 17 new Tractor Supply stores and 4 Petsense stores, with capital expenditures totaling $157.2 million primarily for new stores, remodels, and IT New Store Openings | Store Type | New Store Openings (Q1 2024) | | :------------------------ | :-------------------------- | | Tractor Supply | 17 | | Petsense by Tractor Supply | 4 | Capital Expenditures | Category | March 30, 2024 (Millions of USD) | April 1, 2023 (Millions of USD) | | :------------------------------------------ | :------------------------ | :----------------------- | | New, Relocated, and Not Yet Opened Stores | 61.7 | 33.2 | | Existing Stores | 57.8 | 83.0 | | Information Technology | 24.4 | 21.9 | | Distribution Center Capacity and Improvements | 13.1 | 19.6 | | Corporate and Other | 0.2 | 0.2 | | Total | 157.2 | 157.9 | Selected Operating Metrics Q1 2024 comparable store sales grew 1.1%, driven by a 1.3% increase in comparable average transaction count, partially offset by a 0.2% decrease in average ticket Selected Operating Metrics | Metric | March 30, 2024 | April 1, 2023 | | :------------------------------------------ | :------------- | :------------ | | Comparable Store Sales Growth | 1.1% | 2.1% | | New Store Sales (% of Total Sales) | 1.8% | 4.3% | | Average Transaction Value | $58.66 | $58.92 | | Comparable Store Average Transaction Value (Decrease)/Increase | (0.2)% | 2.8% | | Comparable Store Average Transaction Count (Decrease)/Increase | 1.3% | (0.7)% | | Total Selling Square Footage (Thousands) | 38,136 | 37,532 | | Exclusive Brands (% of Total Sales) | 29.7% | 31.1% | | Imported Merchandise (% of Total Sales) | 11.4% | 11.0% | | Average Inventory Per Store (Thousands of USD) | $1,184.0 | $1,229.8 | | Inventory Turnover (Annualized) | 3.13 | 3.14 | - In Q1 2024, stock repurchase costs totaled $118.5 million, with an average repurchase price of $236.57 per share[27] Additional Information Conference Call Details Tractor Supply Company held a conference call on April 25, 2024, at 10 AM ET, with webcast and investor presentation available on IR.TractorSupply.com and replay provided - The conference call was held on April 25, 2024, at 10:00 AM ET[12] - A webcast and investor presentation are available on IR.TractorSupply.com, with a replay provided after the call[12][13] Forward-Looking Statements Disclaimer This release contains forward-looking statements subject to risks and uncertainties, where actual results may differ materially from expectations, as detailed in SEC filings - Forward-looking statements are subject to risks and uncertainties, where actual results may differ materially from expectations[16] - Readers should exercise caution with these forward-looking statements, as they are valid only as of the date of their release[16] - The company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances after the release date, unless required by law[16]