Tractor Supply Company Reports Record Fourth Quarter and Fiscal 2021 Financial Results

Tractor Supply Company, the largest rural lifestyle retailer in the United States, reported financial results for its fourth quarter and fiscal year ended December 25, 2021.

• Fourth Quarter Net Sales Increased 15.3%; Fourth Quarter Comparable Store Sales Increased 12.7%

• Fiscal Year Net Sales Increased 19.9%; Fiscal Year Comparable Store Sales Increased 16.9%

• Fourth Quarter Diluted Earnings per Share (“EPS”) of $1.93 and Fiscal 2021 Diluted EPS of $8.61

• Provides Robust Fiscal 2022 Financial Outlook and Updates Long-Term Financial Targets

• Increases Quarterly Dividend by 77% to $0.92 per share and Authorizes Additional Share Repurchases of $2.0 Billion

“Tractor Supply had an outstanding fourth quarter, capping off a record year of sales and earnings in 2021. Thank you to our 46,000 Team Members for their hard work, passion and dedication to Life Out Here. Today, our business is substantially stronger than before the pandemic. Our resilient and differentiated business model has allowed us to capitalize on the structural consumer trends benefiting our business, and we believe we have a long growth runway ahead of us. We have strong momentum in our business, and our results demonstrate that our multiyear Life Out Here strategy is working,” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer.

“The combination of the strong cash generation of Tractor Supply’s business and our Board’s confidence in our outlook positions us to return capital to shareholders through the largest dividend increase in our history and an expanded share repurchase authorization. We believe we are well positioned to continue to drive profitable growth and enhance value for our shareholders,” Lawton continued.

Fourth Quarter 2021 Results

Net sales for the fourth quarter 2021 increased 15.3% to $3.32 billion from $2.88 billion in the fourth quarter of 2020. Comparable store sales increased 12.7%, as compared to an increase of 27.3% in the prior year’s fourth quarter. Comparable store sales for the fourth quarter 2021 were driven by comparable average ticket growth and comparable average transaction count growth of 10.3% and 2.4%, 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. 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 38th consecutive quarter.

Gross profit increased 12.6% to $1.12 billion from $995.5 million in the prior year’s fourth quarter, and gross margin decreased 83 basis points to 33.8% from 34.6% in the prior year’s fourth quarter. The Company’s price management actions, primarily due to inflationary cost pressures, and other margin driving initiatives were able to partially offset the impact from significant product cost inflation pressures, higher transportation costs, and to a lesser extent, less favorable product mix.

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization and asset impairment, increased 2.0% to $827.5 million from $811.1 million in the prior year’s fourth quarter. As a percent of net sales, SG&A expenses improved 325 basis points to 24.9% from 28.2% in the fourth quarter of 2020. The fourth quarter of 2020 results include non-cash impairment charges for the Petsense business of $74.1 million1. On an adjusted basis, excluding the impact of the discrete impairment charges in the fourth quarter of 2020, SG&A expenses increased 12.3%, or an improvement of 68 basis points as a percent of net sales compared to the fourth quarter of 2020. On an adjusted basis, 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 and investments in the Company’s strategic initiatives.

Operating income increased 58.9% to $293.1 million compared to $184.5 million in the fourth quarter of 2020. On an adjusted basis, operating income increased 13.4% compared to adjusted operating income of $258.5 million1 in the fourth quarter of 2020, which excluded the impact of the discrete impairment charges in the fourth quarter of 2020.

The effective income tax rate was 22.7% compared to 23.0% in the fourth quarter of 2020.

Net income increased 62.9% to $221.3 million from $135.9 million, and diluted EPS increased 67.8% to $1.93 from $1.15 in the fourth quarter of 2020. Net income and diluted EPS for the fourth quarter of 2021 increased 14.6% and 17.7%, respectively, compared to adjusted fourth quarter of 2020 net income and adjusted diluted EPS of $193.2 million1 and $1.641, respectively. Adjusted net income and adjusted diluted EPS for fourth quarter of 2020 excluded the after-tax impact of the discrete impairment charges in the fourth quarter of 2020 of $57.3 million or $0.49 per diluted share.

In the fourth quarter of 2021, the Company repurchased approximately 0.9 million shares of its common stock for $200.9 million and paid quarterly cash dividends totaling $59.2 million, returning $260.1 million of capital to shareholders in the fourth quarter of 2021.

The Company opened 36 new Tractor Supply stores and one new Petsense store in the fourth quarter of 2021.

Fiscal 2021 Results

Net sales for fiscal 2021 increased 19.9% to $12.73 billion from $10.62 billion in fiscal 2020. Comparable store sales increased 16.9% versus a 23.1% increase in fiscal 2020.

Gross profit increased 19.0% to $4.48 billion from $3.76 billion in fiscal 2020, and gross margin decreased 25 basis points to 35.2% from 35.4% in fiscal 2020.

SG&A expenses, including depreciation and amortization and asset impairment, increased 14.7% to $3.17 billion from $2.76 billion in fiscal 2020. As a percent of net sales, SG&A expenses improved 113 basis points to 24.9% from 26.0% in fiscal 2020. On an adjusted basis excluding the impact of the discrete impairment charges in the prior year, SG&A expenses increased 17.8%, an improvement of 43 basis points as a percent of net sales compared to fiscal 2020.

Operating income increased 31.1% to $1.31 billion compared to $996.9 million in fiscal 2020. On an adjusted basis, operating income increased 22.0% compared to adjusted operating income of $1.07 billion1 in fiscal 2020, which excluded the impact of the discrete impairment charges in the prior year.

The effective income tax rate was 22.1% compared to 22.6% in fiscal 2020.

Net income increased 33.1% to $997.1 million from $749.0 million, and diluted EPS increased 35.0% to $8.61 from $6.38 in fiscal 2020. Net income and diluted EPS for fiscal 2021 increased 23.7% and 25.3%, respectively, compared to adjusted net income and adjusted diluted EPS of $806.2 million1 and $6.871, respectively in fiscal 2020. Adjusted net income and adjusted diluted EPS for fiscal 2020 excluded the after-tax impact of the discrete impairment charges in the fourth quarter of 2020 of $57.3 million, or $0.49 per diluted share.

In fiscal 2021, the Company repurchased approximately 4.4 million shares of its common stock for $798.9 million. The Company also paid quarterly cash dividends totaling $239.0 million year to date, returning $1.04 billion of capital to shareholders.

During fiscal 2021, the Company opened 80 new Tractor Supply stores and seven new Petsense stores and closed 11 Petsense stores.

Fiscal 2022 Financial Outlook

The Company is providing its fiscal 2022 financial guidance based on what it can reasonably predict at this time. Fiscal 2022 comprises 53 weeks, one additional week compared to fiscal 2021. The benefit of the 53rd week is included in the fiscal 2022 guidance and is estimated to be worth approximately 1.5 percentage points of net sales and approximately $0.15 contribution to diluted EPS.

Anticipated capital expenditures include plans in 2022 to open approximately 75 to 80 new Tractor Supply stores, remodel more than 150 stores and transform the side lots in approximately 100 locations, along with opening 10 new Petsense stores. The Company also anticipates the opening of its ninth distribution center in the fall of 2022.

The Company continues to have a strong liquidity position with current cash and cash equivalents of approximately $878 million and no amounts drawn on its $500 million revolving credit facility as of December 25, 2021.

The Company’s outlook for fiscal 2022 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.

Life Out Here Strategy and Updated Long-Term Financial Targets

As part of today’s webcast video event, Tractor Supply’s management will share progress on the Company’s Life Out Here Strategy and outline new supporting initiatives. Key strategic initiatives include store productivity growth through Project Fusion and its Side Lot transformation program, improved in-store experience through staffing model and service enhancements, increased customer engagement through differentiated, personalized mobile experiences, and improvements to supply chain capabilities to deliver on the increased demand for C.U.E. merchandise.

In addition, Tractor Supply is updating its long-term financial growth rate targets. These estimated growth rate targets represent long-term annual targets over fiscal 2022 to fiscal 2026. Performance in any individual year may be lower or higher than these targets. Management will provide insights on these financial targets at today’s event.

Quarterly Dividend

Tractor Supply’s Board of Directors declared a quarterly cash dividend per share of the Company’s common stock of $0.92, which is a 77% increase over the prior quarterly dividend. This will mark the thirteenth consecutive year of a dividend increase for the Company.

The dividend will be paid on March 8, 2022, to shareholders of record of the Company’s common stock as of the close of business on February 21, 2022. Tractor Supply’s Board of Directors must declare each future quarterly dividend prior to payment. The declaration and payment of future dividends, if any, will be determined by the Board of Directors and will depend upon the earnings, financial condition, and capital needs of Tractor Supply, along with other factors which the Board of Directors deem relevant.

Share Repurchases

The Board also authorized a $2.0 billion increase to its existing share repurchase program, bringing the total amount authorized to date under the program to $6.5 billion. As of December 25, 2021, the Company had repurchased 74.2 million shares of common stock (adjusted to reflect the effect of stock splits) for approximately $4.16 billion since the inception of its share repurchase program in 2007.

Share repurchases may be made from time to time in the open market or through privately negotiated transactions at management’s discretion, depending on market conditions and other factors, in accordance with the Securities and Exchange Commission and other applicable legal requirements. The authorization for the share repurchase program may be terminated, increased or decreased by the Company’s Board of Directors at any time.

 

For the fourth quarter and fiscal 2021 results, click here.

About Tractor Supply Company

Tractor Supply Company, 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 46,000 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 December 25, 2021, the Company operated 2,003 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 December 25, 2021, the Company operated 178 Petsense stores in 23 states. For more information on Petsense, visit www.Petsense.com.

Contact:

Mary Winn Pilkington – Media Contact – (615) 440-4212

Source:  Tractor Supply Company