Tractor Supply Company Reports Third Quarter Results

BRENTWOOD, Tenn., Oct. 23, 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 third fiscal quarter ended September 28, 2013.

Third Quarter Results
Net sales increased 13.4% to $1.21 billion from $1.07 billion in the prior year's third quarter.  Comparable store sales increased 7.5% versus a 2.9% increase in the prior year period.  The increase in comparable store sales was broad-based and driven by strong results in key consumable, usable and edible (C.U.E.) products as well as seasonal merchandise.  Sales benefited from an extended spring selling season that resulted from mild temperatures through much of the quarter.

Gross profit increased 16.4% to $415.7 million from $357.2 million in the prior year's third quarter.  As a percent of sales, gross margin increased 90 basis points to 34.4% from 33.5% in the prior year period.  The increase in gross margin resulted from the favorable impact of the Company's key gross margin enhancing initiatives as well as a strong sell-through of spring seasonal products, resulting in fewer markdowns. These increases were partially offset by the continued mix shift to lower-margin, freight-intensive C.U.E. products.

Selling, general and administrative expenses, including depreciation and amortization, improved to 26.0% of sales compared to 26.2% of sales in the prior year's third quarter.  The expense leverage was primarily attributable to strong comparable store sales growth and was partially offset by 40 basis points of one-time costs related to the relocation of its Southeast distribution center and corporate data center.

Net income for the quarter was $64.8 million, or $0.46 per diluted share, compared to net income of $50.0 million, or $0.35 per diluted share, in the third quarter of the prior year.  All references to per share amounts reflect a two-for-one stock split that was effective September 26, 2013.

The Company opened 23 new stores and closed one store in the third quarter of 2013 compared to 17 new store openings and one store closure in the prior year's third quarter.

Greg Sandfort, President and Chief Executive Officer, stated, "We are very pleased with our strong third quarter results and continued momentum in our business. We reacted appropriately to the extended spring and summer selling season and our stores were well-stocked with the right products and inventory levels to drive sales. Mild temperatures and the appropriate product assortment drove strong sell-through of C.U.E. and seasonal merchandise, which, in turn, led to strong comparable store sales, fewer seasonal markdowns and a significant improvement in gross margin. We believe we are well-positioned heading into the important holiday selling season and will continue to execute the business around our sales and margin enhancing initiatives."

First Nine Months Results
Net sales increased 11.0% to $3.75 billion from $3.38 billion in the first nine months of 2012. Comparable store sales increased 5.3% versus a 5.5% increase in the first nine months of 2012. Gross profit increased 11.6% to $1.27 billion from $1.14 billion and gross margin increased 20 basis points to 34.0% of sales from 33.8% of sales in the first nine months of 2012.

Selling, general and administrative expenses, including depreciation and amortization, increased 9.3% to $906.3 million, and improved as a percent of sales to 24.2% compared to 24.6% for the first nine months of 2012.

Net income increased 18.0% to $232.4 million from $197.0 million and net income per diluted share increased 21.5% to $1.64 from $1.35 for the first nine months of 2012.

The Company opened 71 new stores and closed two stores in the first nine months of 2013 compared to 68 new store openings and two store closures during the first nine months of 2012.

Company Outlook
Based on stronger than expected net income per diluted share for the first nine months of the year, the Company now anticipates net income per diluted share for the full-year 2013 will range between $2.24 and $2.27, compared to its previous guidance of $2.18 and $2.22, which reflects the recent two-for-one stock split. Net sales for the full-year 2013 are now expected to range between $5.12 billion and $5.17 billion compared to the Company's previously expected range of $5.10 billion to $5.17 billion. Comparable store sales for the year are now expected to increase 4.2% to 5.0% compared to the prior expectation for an increase of 4.0% to 5.0%.

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 November 6, 2013.

About Tractor Supply Company
At September 28, 2013, Tractor Supply Company operated 1,245 stores in 47 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 successfully and execute our key gross margin-enhancing initiatives, 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)

SOURCE Tractor Supply Company