Core Viewpoint - Tractor Supply has outperformed the broader market in early 2026, with a year-to-date stock increase of approximately 7% compared to less than 1% for the S&P 500 [1] Financial Performance - In the fourth quarter, Tractor Supply reported net sales of $3.9 billion, reflecting a year-over-year increase of 3.3%, with comparable-store sales rising by 0.3% [4] - The company raised its dividend by 4.3% year over year to $0.96 per share, marking the 17th consecutive year of dividend increases [2] Consumer Behavior and Market Position - The company has shown resilience in a mixed consumer environment, with essential categories maintaining strong performance while discretionary spending has moderated [4][5] - A significant portion of Tractor Supply's sales comes from essential items related to animal care and property maintenance, which helps sustain store traffic during economic downturns [5] Growth Opportunities - Management is optimistic about future sales growth, citing ongoing investments in initiatives such as Project Fusion (store remodels), localization, direct sales, final-mile delivery, and pet prescriptions [6] - For fiscal 2026, management anticipates comparable store sales growth of 1% to 3% and earnings per share in the range of $2.13 to $2.23 [7] Long-term Outlook - The company aims to achieve long-term comparable store sales growth of 3% to 5%, supported by planned store openings, operating margin expansion, and share repurchases, which could lead to annualized earnings per share growth of 8% to 11% [8]

Financial Data and Key Metrics Changes - For Q4 2025, net sales increased by 3.3% to $3.9 billion, with comparable store sales rising by 0.3% driven by modest growth in average ticket [10][12] - Diluted EPS for Q4 was $0.43, reflecting modest sales growth, elevated promotional activity, and continued investment in strategic initiatives [10][12] - For the full year 2025, net sales rose by 4.3% to $15.5 billion, with diluted EPS at $2.06 [12][13] - Gross margin for Q4 declined approximately 10 basis points year-over-year, while full-year gross margin expanded by 16 basis points [20][21] Business Line Data and Key Metrics Changes - Consumable, Usable, and Edible categories showed low- to mid-single-digit comparable growth, led by livestock, equine, and poultry supplies [11] - Big-ticket categories, excluding emergency response, experienced a decline in performance, contributing to high single-digit declines [11][12] - Digital business delivered high single-digit growth for the year, reflecting improvements in personalization and conversion [14] Market Data and Key Metrics Changes - Customer engagement remained healthy, with identified customer counts increasing by approximately 2% [11] - The South Atlantic region saw mid-single-digit declines, primarily due to the absence of storm activity compared to the previous year [10][11] Company Strategy and Development Direction - The company is focused on executing its "Life Out Here 2030" strategy, emphasizing new store growth, digital capabilities, and supply chain improvements [15][37] - Plans for 2026 include opening 100 new stores and expanding direct sales and final mile delivery capabilities [25][36] - The company aims to maintain a disciplined approach to capital allocation while investing in growth initiatives [26][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a shift in consumer spending, with essential categories remaining resilient while discretionary demand moderated [8][10] - The broader economic environment remains uncertain, with mixed signals regarding consumer sentiment and spending [17] - For 2026, the company expects total sales growth in the range of 4%-6% and comp sales growth of 1%-3% [22][23] Other Important Information - The company opened 99 new stores in 2025 and plans to continue this trend in 2026 [14][15] - The digital business is expected to scale further, with ongoing investments in AI to improve forecasting and inventory flow [14][36] Q&A Session Summary Question: Gross margin expectations for 2026 - Management expects gross margin expansion in 2026, particularly in the second half, but does not anticipate declines in the first half [42] Question: Trends in first quarter sales - Management indicated that the first quarter is tracking above plan, with optimism due to tax refunds and seasonal demand [44][47] Question: Discretionary spending weakness - Management believes the weakness in discretionary spending was transitory and specific to Q4, with expectations for improvement in 2026 [51][53] Question: Tariff costs and pricing management - Management anticipates similar tariff impacts in 2026 as in the second half of 2025, with effective pricing management to offset costs [56][57] Question: Conditions for restoring comp growth - Management remains committed to returning to a 3%-5% comp sales growth trajectory, supported by strategic investments and operational improvements [60][62] Question: Direct sales model profitability - The direct sales initiative is showing strong momentum, with plans to double the sales specialist count and target $50 million in sales for 2026 [64][66]

Financial Data and Key Metrics Changes - For Q4 2025, net sales increased by 3.3% to $3.9 billion, with comparable store sales rising by 0.3% driven by modest growth in average ticket [10][12] - Full year 2025 net sales grew by 4.3% to $15.5 billion, with diluted earnings per share at $2.06 [12][20] - Fourth quarter diluted EPS was $0.43, reflecting modest sales growth and elevated promotional activity [10][20] - Gross margin for Q4 declined approximately 10 basis points year-over-year, while full year gross margin expanded by 16 basis points [19][20] Business Line Data and Key Metrics Changes - Consumable, Usable, and Edible categories delivered low- to mid-single-digit comparable growth, led by livestock, equine, and poultry supplies [11][12] - Big-ticket categories, excluding emergency response, experienced a decline in performance, contributing to high single-digit declines [11][12] - Digital business showed high single-digit growth for the year, reflecting improvements in personalization and conversion [13] Market Data and Key Metrics Changes - Customer engagement remained healthy, with identified customer counts increasing approximately 2% [11] - The South Atlantic region saw mid-single-digit declines, primarily due to the absence of storm activity compared to the previous year [10][12] Company Strategy and Development Direction - The company is focused on executing its "Life Out Here 2030" strategy, emphasizing new store growth and enhancing customer service [12][14] - Plans for 2026 include opening 100 new stores and expanding distribution capabilities, including a new distribution center in Idaho [25][38] - The company aims to strengthen its core business while scaling new initiatives like direct sales and final mile delivery [35][38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a shift in consumer spending, with essential categories remaining resilient while discretionary demand moderated [7][17] - The broader economic environment remains uncertain, with mixed signals regarding consumer sentiment and spending [17][24] - For 2026, the company expects total sales growth in the range of 4%-6% and comp sales growth of 1%-3% [22][24] Other Important Information - The company opened 99 new stores in 2025, with strong early productivity performance [13][14] - Membership in the Neighbors Club represents over 80% of sales, indicating strong customer loyalty [12] - The company is investing in AI to improve forecasting, inventory flow, and team member productivity [13] Q&A Session Summary Question: Expectations for gross margin in 2026 - Management expects gross margin expansion in the second half of 2026 but does not anticipate declines in the first half [42] Question: Trends in first quarter sales - Management indicated that the first quarter is tracking above plan, with optimism due to potential tax refunds and seasonal demand [44][48] Question: Discretionary spending weakness - Management believes the weakness in discretionary spending was transitory and specific to Q4, with expectations for improvement in 2026 [51][53] Question: Tariff costs and pricing management - Management anticipates similar tariff impacts in 2026 as seen in the second half of 2025, with effective cost management strategies in place [56][57] Question: Conditions for restoring comp growth - Management remains committed to achieving 3%-5% comp sales growth over time, supported by strategic investments and operational improvements [60][62] Question: Direct sales model profitability - Management is pleased with the performance of the direct sales model and plans to double the sales specialist count, targeting $50 million in sales for 2026 [65][67] Question: Inflation and commodity outlook - Management expects modest inflation in the 1%-2% range for 2026, with ongoing monitoring of commodity prices [71][74] Question: Garden center initiative updates - Management is committed to expanding garden centers and has seen strong performance in live goods, with plans for over 1,000 stores involved in this initiative [76][78] Question: Sale-leaseback benefits - Management indicated that sale-leaseback benefits will be flat year-over-year, with a focus on their new real estate model providing significant savings [79][81]

SUPPLEMENTAL FINANCIAL PRESENTATION January 29, 2026 Q4 2025 EARNINGS HIGHLIGHTS SAFE HARBOR The forward -looking statements included in this presentation are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including statements regarding market share gains, positive customer trends, new s ...