Tractor Supply Company Reports Third Quarter 2022 Financial Results
Tractor Supply Company, the largest rural lifestyle retailer in the United States, today reported financial results for its third quarter ended September 24, 2022.
“Tractor Supply delivered another record quarter as we continued to gain market share and extended our trend of consistent and stable net sales and earnings growth. In a dynamic environment, the underlying health of our business remains resilient given our needs-based, demand-driven product categories, best-in-class customer service and customer relationship management capabilities. I want to thank the entire Tractor Supply team for their hard work to deliver our strong third quarter results, their dedication to advance our strategic plans to deliver sustainable long-term growth and their commitment to living our Mission and Values,” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer.
“Our Life Out Here strategy is gaining traction and widening our competitive moat, and we are excited about the many growth vectors ahead. We are honored to welcome the Orscheln Farm and Home team to Tractor Supply. With 25% of our store base now in our Project Fusion store format and over 260 Garden Centers operating across the chain, we are on track to achieve major milestones in the history of Tractor Supply with net sales exceeding $14 billion, more than 2,100 Tractor Supply stores and 50,000 dedicated Team Members. We believe we have the right strategies to manage through the near-term and to deliver long-term balanced growth and value creation,” said Lawton.
Third Quarter 2022 Results
Net sales for the third quarter of 2022 increased 8.4% to $3.27 billion from $3.02 billion in the third quarter of 2021. Comparable store sales increased 5.7%, as compared to an increase of 13.1% in the prior year’s third quarter. Comparable store sales for the third quarter of 2022 were driven by comparable average ticket growth of 7.0%, partially offset by a comparable average transaction count decline of 1.3%. Comparable store sales growth reflects continued strength in every day, needs-based merchandise, including consumable, usable and edible (“C.U.E.”) products and year-round product categories.
Gross profit increased 7.4% to $1.17 billion from $1.09 billion in the prior year’s third quarter, and gross margin decreased 32 basis points to 35.6% from 36.0% in the prior year’s third quarter. The gross margin rate decrease was primarily attributable to product mix from the robust growth of C.U.E. products as the Company’s price management actions and other margin driving initiatives were able to offset the impact from significant product cost inflation pressures and higher transportation costs.
Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased 9.0% to $859.4 million from $788.1 million in the prior year’s third quarter. As a percent of net sales, SG&A expenses increased 16 basis points to 26.3% from 26.1% in the third quarter of 2021. The increase in SG&A as a percent of net sales was primarily attributable to the Company’s strategic growth initiatives, including depreciation and amortization, and investments in hourly wages and benefits. These items were partially offset by a moderation of COVID-19 response costs, more normalized incentive compensation, and leverage in occupancy and other costs from the increase in comparable store sales.
Operating income increased 3.1% to $306.4 million compared to $297.2 million in the third quarter of 2021.
The effective income tax rate improved to 22.0% compared to 22.9% in the third quarter of 2021 due to certain state tax credits.
Net income increased 4.3% to $234.1 million from $224.4 million, and diluted earnings per share increased 7.7% to $2.10 from $1.95 in the third quarter of 2021.
The Company repurchased approximately 0.6 million shares of its common stock for $123.6 million and paid quarterly cash dividends totaling $101.9 million, returning $225.5 million of capital to shareholders in the third quarter of 2022.
The Company opened 11 new Tractor Supply stores and two new Petsense by Tractor Supply stores in the third quarter of 2022.
Fiscal 2022 Financial Outlook
The Company is updating its fiscal 2022 financial guidance, previously provided on July 21, 2022, to reflect the strong performance year to date and its outlook for the fourth quarter of 2022. The Company’s fiscal 2022 financial outlook has been updated for the recent acquisition of Orscheln Farm and Home which closed on October 12, 2022. The acquisition is anticipated to add approximately $75 million to net sales in the fourth quarter and fiscal 2022. Given the transaction expenses and early implementation costs to be recorded in the fourth quarter of 2022, the impact of the acquisition is expected to be relatively neutral to operating income in the fourth quarter and for the fiscal year.
Fiscal 2022 comprises 53 weeks, one additional week compared to fiscal 2021. The fiscal 2022 guidance includes a benefit for the 53rd week, which is estimated to be approximately 1.5 percentage points of net sales and $0.15 of diluted EPS.
For fiscal 2022, the Company now expects the following:
|Net Sales||$14.06 billion – $14.12 billion||$13.95 billion – $14.05 billion|
|Comparable Store Sales||+5.4% – +5.8%||+5.2% – +5.8%|
|Operating Margin Rate||10.10% – 10.15%||~10.2%|
|Net Income||$1.07 billion – $1.08 billion||$1.065 billion – $1.085 billion|
|Earnings per Diluted Share||$9.55 – $9.63||$9.48 – $9.60|
Capital expenditures for fiscal 2022 are currently forecasted to be in the range of $650 million to $700 million, including the opening of approximately 60 to 70 new Tractor Supply stores and 10 new Petsense by Tractor Supply stores. New store openings of Tractor Supply stores in 2022 have been delayed due to external conditions of the real estate and construction industries.
For the complete press release, click here.
About Tractor Supply Company
Tractor Supply Company (NASDAQ: TSCO), 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 nearly 48,000 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 June 25, 2022, the Company operated 2,016 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 by Tractor Supply, a 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 June 25, 2022, the Company operated 178 Petsense by Tractor Supply stores in 23 states. For more information on Petsense by Tractor Supply, visit www.Petsense.com.
Mary Winn Pilkington – Media Contact – (615) 440-4212
Source: Tractor Supply Company