Tractor Supply Company Reports Second Quarter Results

~ Earnings per Share Increased 20.7% to $1.75 vs. $1.45

~~ Raises Full Year 2013 EPS Guidance

~~ Sales Increased 12.7% to $1.46 Billion and Same-Store Sales Improved 7.2%

24 Jul, 2013, 16:01 ET from Tractor Supply Company

BRENTWOOD, Tenn., July 24, 2013 /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 29, 2013.

(Logo: http://photos.prnewswire.com/prnh/20120604/MM18615LOGO )

Second Quarter Results Net sales increased 12.7% to $1.46 billion from $1.29 billion in the prior year's second quarter.  Same-store sales increased 7.2% compared to a 3.2% increase in the prior-year period.  The same-store sales increase was broad-based and driven by continued strong results in key consumable, usable and edible (C.U.E.) products and seasonal merchandise. 

Gross margin dollars increased to $506.1 million from $451.5 million in the prior year's second quarter.  As a percent of sales, gross margin decreased slightly to 34.8% from 34.9% in the prior year.  The decrease in gross margin as a percent of sales resulted primarily from the continued mix shift to lower-margin C.U.E. products, as well as increased transportation costs.  These decreases were partially offset by the favorable impact from key margin-enhancing initiatives.

Selling, general and administrative expenses, including depreciation and amortization, improved to 21.2% of sales compared to 21.8% of sales in the prior year's second quarter.  The improvement as a percent of sales was primarily attributable to strong same-store sales growth and expense control with respect to store operating costs, as well as lower year-over-year incentive compensation expense as a percent of sales.

Net income for the quarter was $123.6 million, or $1.75 per diluted share, compared to net income of $106.6 million, or $1.45 per diluted share, in the second quarter of the prior year. 

The Company opened 26 new stores in the second quarter of 2013 compared to 18 new store openings in the prior year's second quarter.

Greg Sandfort, President and Chief Executive Officer, stated, "We anticipated a late start to spring this year, and entered the second quarter well-positioned to take advantage of the seasonal shift.  As a result, we delivered a solid increase in store traffic, strong same-store sales growth across geographic regions and double-digit EPS growth.  Despite the seasonal change, our team managed the business effectively and continued to do a great job serving our customers, with C.U.E. categories posting solid increases in both sales and units and contributing to our 21st consecutive quarter of year-over-year same-store transaction count increases."

First Six Months Results Net sales increased 9.9% to $2.54 billion from $2.31 billion in the first six months of 2012. Same-store sales increased 4.2% compared to a 6.7% increase in the first six months of 2012. Gross margin dollars grew 9.4% to $858.2 million, or 33.8% of sales, compared to $784.3 million, or 33.9% of sales, in the first six months of 2012.

Selling, general and administrative expenses, including depreciation and amortization, were $592.3 million, an increase of 7.7%, but improved as a percent of sales to 23.4% compared to 23.8% for the first six months of 2012.

Net income was $167.6 million, or $2.37 per diluted share, compared to net income of $146.9 million, or $2.00 per diluted share, for the first six months of 2012.

The Company opened 48 new stores in the first six months of 2013 compared to 51 new store openings during the first six months of 2012.

Company Outlook Net sales for the full-year 2013 are now expected to range between $5.10 billion and $5.17 billion compared to the Company's previously expected range of $5.07 billion to $5.17 billion. Same-store sales for the year are now expected to increase 4% to 5% compared to the prior expectation for an increase of 3% to 5%. Based on stronger than expected net income per diluted share for the first half of the year, the Company now anticipates net income per diluted share for the full-year 2013 will range between $4.36 and $4.44, compared to its previous guidance of $4.32 and $4.40. This projection includes estimated costs of $0.06 to $0.07 per diluted share associated with the relocation of the Company's Southeast distribution center and its corporate data center. 

Mr. Sandfort concluded, "Our performance in the first half of 2013 again demonstrated the continued strength of our core businesses, as well as our ability to manage through seasonal variances.  We place great rigor into better understanding and serving our customers' evolving needs, while seeking to introduce new customers to the Tractor Supply brand.  We believe our Company has a great opportunity ahead of us to grow the business, while continuing to deliver 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 website 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 August 7, 2013.

About Tractor Supply Company At June 29, 2013, Tractor Supply Company operated 1,223 stores in 46 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, capital expenditures and new store openings 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, without limitation, 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, the ability to manage expenses, the availability of favorable credit sources, capital market conditions in general, failure to open new stores in the manner and number 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, changes in federal, state or local regulations, potential judgments, fines, legal fees and other costs, breach of privacy, ongoing and potential future legal or regulatory proceedings, management of our information systems, failure to secure or 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 and results of examination by taxing authorities, 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.

(Financial tables to follow)

 

 

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except per share amounts)

 

SECOND QUARTER ENDED

SIX MONTHS ENDED

June 29, 2013

June 30, 2012

June 29, 2013

June 30, 2012

% of

% of

% of

% of

Sales

Sales

Sales

Sales

Net sales

$

1,455,767

100.0%

$

1,291,899

100.0%

$

2,541,605

100.0%

$

2,312,316

100.0%

Cost of merchandise sold

949,627

65.2

840,438

65.1

1,683,374

66.2

1,528,055

66.1

Gross margin

506,140

34.8

451,461

34.9

858,231

33.8

784,261

33.9

Selling, general and administrative expenses

283,941

19.5

259,184

20.1

545,410

21.5

505,852

21.9

Depreciation and amortization

24,220

1.7

22,433

1.7

46,919

1.9

44,172

1.9

Operating income

197,979

13.6

169,844

13.1

265,902

10.4

234,237

10.1

Interest expense, net

556

31

735

614

Income before income taxes

197,423

13.6

169,813

13.1

265,167

10.4

233,623

10.1

Income tax expense

73,843

5.1

63,192

4.8

97,581

3.8

86,674

3.7

Net income

$

123,580

8.5%

$

106,621

8.3%

$

167,586

6.6%

$

146,949

6.4%

Net income per share:

Basic

$

1.77

$

1.48

$

2.41

$

2.05

Diluted

$

1.75

$

1.45

$

2.37

$

2.00

Weighted average shares outstanding:

Basic

69,672

71,814

69,537

71,704

Diluted

70,790

73,488

70,775

73,491

Dividends declared per common share outstanding

$

0.26

$

0.20

$

0.46

$

0.32

 

 

 

 

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

 

June 29, 2013

June 30, 2012

ASSETS

Current assets:

Cash and cash equivalents

$

55,698

$

179,100

Restricted cash

8,800

Inventories

1,082,861

946,934

Prepaid expenses and other current assets

52,676

56,331

Deferred income taxes

14,446

7,084

    Total current assets

1,205,681

1,198,249

Property and equipment:

Land

65,290

41,821

Buildings and improvements

531,142

492,379

Furniture, fixtures and equipment

371,565

330,562

Computer software and hardware

132,875

117,521

Construction in progress

74,393

16,024

1,175,265

998,307

Accumulated depreciation and amortization

(563,789)

(497,278)

    Property and equipment, net

611,476

501,029

Goodwill

10,258

10,258

Deferred income taxes

2,646

Other assets

16,363

12,876

    Total assets

$

1,846,424

$

1,722,412

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

360,811

$

314,757

Accrued employee compensation

26,783

29,325

Other accrued expenses

138,417

126,445

Current portion of capital lease obligations

39

35

Income taxes payable

53,482

64,160

    Total current liabilities

579,532

534,722

Capital lease obligations, less current maturities

1,224

1,263

Deferred income taxes

6,157

Deferred rent

76,474

76,667

Other long-term liabilities

45,447

36,464

    Total liabilities

702,677

655,273

Stockholders' equity:

Common stock

661

652

Additional paid-in capital

414,356

335,899

Treasury stock

(778,476)

(539,909)

Retained earnings

1,507,206

1,270,497

    Total stockholders' equity

1,143,747

1,067,139

    Total liabilities and stockholders' equity

$

1,846,424

$

1,722,412

 

 

 

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

SIX MONTHS ENDED

June 29, 2013

June 30, 2012

Cash flows from operating activities:

Net income

$

167,586

$

146,949

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

46,919

44,172

(Gain) loss on disposition of property and equipment

(178)

146

Stock compensation expense

6,934

9,309

Excess tax benefit of stock options exercised

(24,804)

(16,497)

Deferred income taxes

4,529

(5,887)

Change in assets and liabilities:

        Inventories

(174,745)

(116,115)

        Prepaid expenses and other current assets

(868)

(4,603)

        Accounts payable

40,419

48,348

        Accrued employee compensation

(21,617)

(18,936)

        Other accrued expenses

(19,639)

(6,422)

        Income taxes payable

34,927

68,783

        Other

3,360

2,923

        Net cash provided by operating activities

62,823

152,170

Cash flows from investing activities:

Capital expenditures

(98,626)

(65,566)

Proceeds from sale of property and equipment

235

Decrease in restricted cash

8,400

13,070

        Net cash used in investing activities

(89,991)

(52,496)

Cash flows from financing activities:

Borrowings under revolving credit agreement

135,000

Repayments under revolving credit agreement

(135,000)

Excess tax benefit of stock options exercised

24,804

16,497

Principal payments under capital lease obligations

(17)

(19)

Repurchase of shares to satisfy tax obligations

(3,942)

(6,581)

Repurchase of common stock

(69,304)

(102,536)

Net proceeds from issuance of common stock

24,808

18,146

Cash dividends paid to stockholders

(32,113)

(23,046)

        Net cash used in financing activities

(55,764)

(97,539)

Net (decrease) increase in cash and cash equivalents

(82,932)

2,135

Cash and cash equivalents at beginning of period

138,630

176,965

Cash and cash equivalents at end of period

$

55,698

$

179,100

Supplemental disclosures of cash flow information:

Cash paid during the period for:

    Interest                                                                        

$

276

$

86

    Income taxes

59,003

22,616

Non-cash accruals for construction in progress

20,637

1,181

 

 

 

Selected Financial and Operating Information

(Unaudited)

 

SECOND QUARTER ENDED

SIX MONTHS ENDED

June 29, 2013

June 30, 2012

June 29, 2013

June 30, 2012

Sales Information:

Same-store sales increase

7.2%

3.2%

4.2%

6.7%

New store sales (% of total sales)

5.0%

6.0%

5.3%

5.9%

Average transaction value

$46.81

$45.70

$44.82

$44.49

Same-store average transaction value increase

2.3%

0.1%

0.6%

3.0%

Same-store average transaction count increase

4.8%

2.9%

3.6%

3.4%

Total selling square footage (000's)

19,602

18,265

19,602

18,265

Store Count Information:

Beginning of period

1,197

1,117

1,176

1,085

New stores opened

26

18

48

51

Stores closed

(1)

(1)

End of period

1,223

1,135

1,223

1,135

Pre-opening costs (000's)

$1,835

$1,549

$3,358

$3,613

Balance Sheet Information:

Average inventory per store (000's) (a)

$830.3

$793.1

$830.3

$793.1

Inventory turns (annualized)

3.52

3.42

3.30

3.27

Share repurchase program:

Cost (000's)

$19,441

$98,394

$69,304

$102,536

Average purchase price per share

$109.94

$88.96

$99.10

$88.34

Capital Expenditures (millions):

New and relocated stores and stores not yet opened

$17.6

$12.8

$29.9

$31.0

Distribution center capacity and improvements

13.7

2.2

33.1

3.0

Corporate and other

11.1

0.3

12.1

0.4

Information technology

3.7

6.6

14.7

13.1

Existing stores

3.2

4.9

5.5

7.9

Purchase of previously leased stores

0.0

7.0

3.3

10.2

Total

$49.3

$33.8

$98.6

$65.6

(a) Assumes average inventory cost, excluding inventory in transit.

 

SOURCE Tractor Supply Company



RELATED LINKS

http://www.TractorSupply.com