Tractor Supply Company Reports Record Second Quarter 2022 Financial Results; Raises Fiscal 2022 Financial Outlook
Tractor Supply Company (NASDAQ: TSCO) reported a strong second quarter for 2022, with net sales rising 8.4% to $3.90 billion and diluted EPS increasing 10.7% to $3.53. Comparable store sales grew by 5.5%, driven by a 7.5% increase in average ticket size. The company raised its fiscal 2022 outlook, expecting net sales of $13.95 billion to $14.05 billion. Operating income increased by 8.1%, alongside a net income rise of 7.1%. The company also repurchased 0.9 million shares and paid $102.6 million in dividends, demonstrating its commitment to shareholder returns.
- Net sales increased 8.4% to $3.90 billion.
- Diluted EPS rose 10.7% to $3.53.
- Raised fiscal 2022 net sales guidance to $13.95-$14.05 billion.
- Operating income up 8.1%, reaching $525 million.
- Repurchased 0.9 million shares for $188.2 million.
- Comparable store sales growth slowed to 5.5% from 10.5% year-over-year.
- Gross margin decreased 24 basis points to 35.5%.
-
Net Sales Increased
8.4% ; Comparable Store Sales Increased5.5% -
Diluted Earnings per Share (“EPS”) Increased
10.7% to$3.53 - Company Raises Fiscal 2022 Financial Outlook to Reflect Outperformance in the First Half of the Year
“Tractor Supply had a strong second quarter that was in line with our expectations with record results on both sales and earnings. Our team’s outstanding focus on serving our customers with the products and services they need to live the Out Here lifestyle allowed us to capture broad-based market share during the quarter,” said
Lawton continued, “Given the strong performance in the first half of the year, ongoing consistency of our sales performance, visibility into our cost structure and the quality of our inventory, we are raising our financial outlook for the full year. We believe
Second Quarter 2022 Results
Net sales for the second quarter of 2022 increased
Gross profit increased
Selling, general and administrative ("SG&A") expenses, including depreciation and amortization, increased
Operating income increased
The effective income tax rate was
Net income increased
In the second quarter of 2022, the Company repurchased approximately 0.9 million shares of its common stock for
During the second quarter of 2022, the Company opened 13 new
Fiscal 2022 Financial Outlook
The Company is updating its fiscal 2022 financial guidance to reflect its strong performance in the first half of the 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
For fiscal 2022, the Company now expects the following:
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Updated |
Previous |
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Comparable Store Sales |
+ |
+ |
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Operating Margin Rate |
~ |
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Net Income |
|
|
||
Earnings per Diluted Share |
|
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Capital expenditures for fiscal 2022 are currently forecasted to be in the range of
The Company’s outlook for fiscal 2022 does not contemplate the impact of the pending acquisition of
Conference Call Information
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About
Forward-Looking Statements
As with any business, all phases of the Company’s operations are subject to influences outside its control. This press release contains certain forward-looking statements, including statements regarding sales and earnings growth, new store growth, the effects of the 53rd week in fiscal 2022, capital expenditures, strategic initiatives, estimated results of operations, including, but not limited to, sales, comparable store sales, operating margins, net income and EPS. Forward-looking statements are usually identified by or are associated with such words as “intend,” “expect,” “believe,” “anticipate,” “optimistic,” “forecasted” and similar terminology. Actual results could vary materially from the expectations reflected in these statements. Factors affecting future results include, without limitation, the timing of normalized macroeconomic conditions from the impacts of the COVID-19 pandemic, the Company’s ability to predict the timing of normalized macroeconomic conditions, the timing and amount of share repurchases, marketing, merchandising and strategic initiatives and new store and distribution center openings and expenses in future periods, including incremental costs associated with COVID-19. All 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, national, regional and local economic conditions affecting consumer spending, including the effects of COVID-19, inflation and gas prices, effects resulting from wars or other military operations, including the heightened risk of cyberattacks as a result of the hostilities between
(Financial tables to follow)
Condensed Consolidated Statements of Income |
||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||
(in thousands, except per share and percentage data) |
||||||||||||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||||||||||
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|
|
|
|
|
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|
|||||||||||||||||
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% of |
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% of |
|
|
|
% of |
|
|
|
% of |
|||||||||
|
|
|
Net |
|
|
|
Net |
|
|
|
Net |
|
|
|
Net |
|||||||||
|
|
|
Sales |
|
|
|
Sales |
|
|
|
Sales |
|
|
|
Sales |
|||||||||
Net sales |
$ |
3,903,406 |
|
100.00 |
% |
|
$ |
3,601,559 |
|
100.00 |
% |
|
$ |
6,927,538 |
|
100.00 |
% |
|
$ |
6,393,895 |
|
100.00 |
% |
|
Cost of merchandise sold |
|
2,517,151 |
|
64.49 |
|
|
|
2,314,074 |
|
64.25 |
|
|
|
4,484,774 |
|
64.74 |
|
|
|
4,122,630 |
|
64.48 |
|
|
Gross profit |
|
1,386,255 |
|
35.51 |
|
|
|
1,287,485 |
|
35.75 |
|
|
|
2,442,764 |
|
35.26 |
|
|
|
2,271,265 |
|
35.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative expenses |
|
777,860 |
|
19.93 |
|
|
|
736,749 |
|
20.46 |
|
|
|
1,512,437 |
|
21.83 |
|
|
|
1,429,939 |
|
22.36 |
|
|
Depreciation and amortization |
|
83,360 |
|
2.14 |
|
|
|
64,853 |
|
1.80 |
|
|
|
161,006 |
|
2.32 |
|
|
|
124,907 |
|
1.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating income |
|
525,035 |
|
13.45 |
|
|
|
485,883 |
|
13.49 |
|
|
|
769,321 |
|
11.11 |
|
|
|
716,419 |
|
11.21 |
|
|
Interest expense, net |
|
7,097 |
|
0.18 |
|
|
|
6,701 |
|
0.19 |
|
|
|
14,166 |
|
0.20 |
|
|
|
13,922 |
|
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
|
517,938 |
|
13.27 |
|
|
|
479,182 |
|
13.30 |
|
|
|
755,155 |
|
10.91 |
|
|
|
702,497 |
|
10.99 |
|
|
Income tax expense |
|
121,460 |
|
3.11 |
|
|
|
109,160 |
|
3.03 |
|
|
|
171,450 |
|
2.47 |
|
|
|
151,121 |
|
2.37 |
|
|
Net income |
$ |
396,478 |
|
10.16 |
% |
|
$ |
370,022 |
|
10.27 |
% |
|
$ |
583,705 |
|
8.43 |
% |
|
$ |
551,376 |
|
8.62 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
3.55 |
|
|
|
$ |
3.21 |
|
|
|
$ |
5.21 |
|
|
|
$ |
4.77 |
|
|
|||||
Diluted |
$ |
3.53 |
|
|
|
$ |
3.19 |
|
|
|
$ |
5.17 |
|
|
|
$ |
4.73 |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic |
|
111,590 |
|
|
|
|
115,133 |
|
|
|
|
112,060 |
|
|
|
|
115,643 |
|
|
|||||
Diluted |
|
112,318 |
|
|
|
|
116,091 |
|
|
|
|
112,911 |
|
|
|
|
116,659 |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Dividends declared per common share outstanding |
$ |
0.92 |
|
|
|
$ |
0.52 |
|
|
|
$ |
1.84 |
|
|
|
$ |
1.04 |
|
|
Note: Percent of net sales amounts may not sum to totals due to rounding.
Condensed Consolidated Statements of Comprehensive Income |
||||||||||||
(Unaudited) |
||||||||||||
(in thousands) |
||||||||||||
|
Three Months Ended |
|
Six Months Ended |
|||||||||
|
|
|
|
|
|
|
|
|||||
Net income |
$ |
396,478 |
|
$ |
370,022 |
|
$ |
583,705 |
|
$ |
551,376 |
|
|
|
|
|
|
|
|
|
|||||
Other comprehensive income: |
|
|
|
|
|
|
|
|||||
Change in fair value of interest rate swaps, net of taxes |
|
1,810 |
|
|
320 |
|
|
7,803 |
|
|
2,445 |
|
Total other comprehensive income |
|
1,810 |
|
|
320 |
|
|
7,803 |
|
|
2,445 |
|
Total comprehensive income |
$ |
398,288 |
|
$ |
370,342 |
|
$ |
591,508 |
|
$ |
553,821 |
Condensed Consolidated Balance Sheets |
||||||||
(Unaudited) |
||||||||
(in thousands) |
||||||||
|
|
|
|
|||||
ASSETS |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
530,822 |
|
|
$ |
1,412,001 |
|
|
Inventories |
|
2,485,138 |
|
|
|
1,992,824 |
|
|
Prepaid expenses and other current assets |
|
214,436 |
|
|
|
162,318 |
|
|
Total current assets |
|
3,230,396 |
|
|
|
3,567,143 |
|
|
|
|
|
|
|||||
Property and equipment, net |
|
1,744,556 |
|
|
|
1,333,852 |
|
|
Operating lease right-of-use assets |
|
2,760,148 |
|
|
|
2,675,030 |
|
|
|
|
55,520 |
|
|
|
55,520 |
|
|
Deferred income taxes |
|
— |
|
|
|
18,772 |
|
|
Other assets |
|
78,574 |
|
|
|
37,571 |
|
|
Total assets |
$ |
7,869,194 |
|
|
$ |
7,687,888 |
|
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Accounts payable |
$ |
1,280,518 |
|
|
$ |
1,221,911 |
|
|
Accrued employee compensation |
|
42,474 |
|
|
|
84,810 |
|
|
Other accrued expenses |
|
470,082 |
|
|
|
381,836 |
|
|
Current portion of finance lease liabilities |
|
3,502 |
|
|
|
4,771 |
|
|
Current portion of operating lease liabilities |
|
364,643 |
|
|
|
306,125 |
|
|
Income taxes payable |
|
80,959 |
|
|
|
84,078 |
|
|
Total current liabilities |
|
2,242,178 |
|
|
|
2,083,531 |
|
|
|
|
|
|
|||||
Long-term debt |
|
987,411 |
|
|
|
985,353 |
|
|
Finance lease liabilities, less current portion |
|
35,859 |
|
|
|
30,672 |
|
|
Operating lease liabilities, less current portion |
|
2,543,133 |
|
|
|
2,488,088 |
|
|
Deferred income taxes |
|
36,256 |
|
|
|
— |
|
|
Other long-term liabilities |
|
110,490 |
|
|
|
120,131 |
|
|
Total liabilities |
|
5,955,327 |
|
|
|
5,707,775 |
|
|
|
|
|
|
|||||
Stockholders’ equity: |
|
|
|
|||||
Common stock |
|
1,414 |
|
|
|
1,410 |
|
|
Additional paid-in capital |
|
1,220,682 |
|
|
|
1,175,123 |
|
|
|
|
(4,640,236 |
) |
|
|
(3,813,667 |
) |
|
Accumulated other comprehensive income/(loss) |
|
9,148 |
|
|
|
(798 |
) |
|
Retained earnings |
|
5,322,859 |
|
|
|
4,618,045 |
|
|
Total stockholders’ equity |
|
1,913,867 |
|
|
|
1,980,113 |
|
|
Total liabilities and stockholders’ equity |
$ |
7,869,194 |
|
|
$ |
7,687,888 |
|
Condensed Consolidated Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
(in thousands) |
||||||||
|
Six Months Ended |
|||||||
|
|
|
|
|||||
Cash flows from operating activities: |
|
|
|
|||||
Net income |
$ |
583,705 |
|
|
$ |
551,376 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|||||
Depreciation and amortization |
|
161,006 |
|
|
|
124,907 |
|
|
Loss on disposition of property and equipment |
|
594 |
|
|
|
3,752 |
|
|
Share-based compensation expense |
|
24,850 |
|
|
|
23,194 |
|
|
Deferred income taxes |
|
38,693 |
|
|
|
12,814 |
|
|
Change in assets and liabilities: |
|
|
|
|||||
Inventories |
|
(293,946 |
) |
|
|
(209,554 |
) |
|
Prepaid expenses and other current assets |
|
(50,318 |
) |
|
|
(28,659 |
) |
|
Accounts payable |
|
124,888 |
|
|
|
245,815 |
|
|
Accrued employee compensation |
|
(67,144 |
) |
|
|
(34,891 |
) |
|
Other accrued expenses |
|
(22,896 |
) |
|
|
59,247 |
|
|
Income taxes |
|
98,059 |
|
|
|
64,140 |
|
|
Other |
|
28,114 |
|
|
|
(3,234 |
) |
|
Net cash provided by operating activities |
|
625,605 |
|
|
|
808,907 |
|
|
Cash flows from investing activities: |
|
|
|
|||||
Capital expenditures |
|
(265,308 |
) |
|
|
(216,029 |
) |
|
Proceeds from sale of property and equipment |
|
178 |
|
|
|
316 |
|
|
Net cash used in investing activities |
|
(265,130 |
) |
|
|
(215,713 |
) |
|
Cash flows from financing activities: |
|
|
|
|||||
Principal payments under finance lease liabilities |
|
(2,527 |
) |
|
|
(2,207 |
) |
|
Repurchase of shares to satisfy tax obligations |
|
(27,672 |
) |
|
|
(13,588 |
) |
|
Repurchase of common stock |
|
(484,390 |
) |
|
|
(456,714 |
) |
|
Net proceeds from issuance of common stock |
|
12,995 |
|
|
|
70,026 |
|
|
Cash dividends paid to stockholders |
|
(206,089 |
) |
|
|
(120,466 |
) |
|
Net cash used in financing activities |
|
(707,683 |
) |
|
|
(522,949 |
) |
|
Net (decrease)/increase in cash and cash equivalents |
|
(347,208 |
) |
|
|
70,245 |
|
|
Cash and cash equivalents at beginning of period |
|
878,030 |
|
|
|
1,341,756 |
|
|
Cash and cash equivalents at end of period |
$ |
530,822 |
|
|
$ |
1,412,001 |
|
|
|
|
|
|
|||||
Supplemental disclosures of cash flow information: |
|
|
|
|||||
Cash paid during the period for: |
|
|
|
|||||
Interest |
$ |
11,673 |
|
|
$ |
11,626 |
|
|
Income taxes |
|
36,820 |
|
|
|
74,457 |
|
|
|
|
|
|
|||||
Supplemental disclosures of non-cash activities: |
|
|
|
|||||
Non-cash accruals for property and equipment |
$ |
42,974 |
|
|
$ |
10,418 |
|
|
Increase of operating lease assets and liabilities from new or modified leases |
|
135,858 |
|
|
|
404,100 |
|
|
Increase of finance lease assets and liabilities from new or modified leases |
|
5,143 |
|
|
|
— |
|
Selected Financial and Operating Information |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Sales Information: |
|
|
|
|
|
|
|
|
||||||||
Comparable store sales increase |
|
|
5.5 |
% |
|
|
10.5 |
% |
|
|
5.4 |
% |
|
|
21.2 |
% |
New store sales (% of total sales) |
|
|
2.2 |
% |
|
|
2.8 |
% |
|
|
2.4 |
% |
|
|
2.9 |
% |
Average transaction value |
|
$ |
63.52 |
|
|
$ |
59.07 |
|
|
$ |
60.29 |
|
|
$ |
56.27 |
|
Comparable store average transaction value increase (a) |
|
|
7.5 |
% |
|
|
6.0 |
% |
|
|
7.1 |
% |
|
|
9.7 |
% |
Comparable store average transaction count (decrease)/increase |
|
|
(2.0 |
) % |
|
|
4.5 |
% |
|
|
(1.7 |
) % |
|
|
11.5 |
% |
Total selling square footage (000's) |
|
|
33,759 |
|
|
|
32,653 |
|
|
|
33,759 |
|
|
|
32,653 |
|
Exclusive brands (% of total sales) |
|
|
28.8 |
% |
|
|
28.3 |
% |
|
|
29.3 |
% |
|
|
29.5 |
% |
Imports (% of total sales) |
|
|
11.5 |
% |
|
|
11.8 |
% |
|
|
11.6 |
% |
|
|
11.9 |
% |
|
|
|
|
|
|
|
|
|
||||||||
Store Count Information: |
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Beginning of period |
|
|
2,003 |
|
|
|
1,944 |
|
|
|
2,003 |
|
|
|
1,923 |
|
New stores opened |
|
|
13 |
|
|
|
11 |
|
|
|
13 |
|
|
|
32 |
|
Stores closed |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
End of period |
|
|
2,016 |
|
|
|
1,955 |
|
|
|
2,016 |
|
|
|
1,955 |
|
|
|
|
|
|
|
|
|
|
||||||||
Beginning of period |
|
|
178 |
|
|
|
177 |
|
|
|
178 |
|
|
|
182 |
|
New stores opened |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
3 |
|
Stores closed |
|
|
— |
|
|
|
(4 |
) |
|
|
(1 |
) |
|
|
(11 |
) |
End of period |
|
|
178 |
|
|
|
174 |
|
|
|
178 |
|
|
|
174 |
|
Consolidated end of period |
|
|
2,194 |
|
|
|
2,129 |
|
|
|
2,194 |
|
|
|
2,129 |
|
|
|
|
|
|
|
|
|
|
||||||||
Pre-opening costs (000’s) |
|
$ |
1,587 |
|
|
$ |
1,181 |
|
|
$ |
2,389 |
|
|
$ |
3,494 |
|
|
|
|
|
|
|
|
|
|
||||||||
Balance Sheet Information: |
|
|
|
|
|
|
|
|
||||||||
Average inventory per store (000’s) (b) |
|
$ |
1,051.0 |
|
|
$ |
865.7 |
|
|
$ |
1,051.0 |
|
|
$ |
865.7 |
|
Inventory turns (annualized) |
|
|
4.20 |
|
|
|
4.76 |
|
|
|
3.94 |
|
|
|
4.38 |
|
Share repurchase program: |
|
|
|
|
|
|
|
|
||||||||
Cost (000’s) |
|
$ |
188,210 |
|
|
$ |
203,305 |
|
|
$ |
484,390 |
|
|
$ |
456,714 |
|
Average purchase price per share |
|
$ |
199.88 |
|
|
$ |
181.81 |
|
|
$ |
210.62 |
|
|
$ |
168.00 |
|
|
|
|
|
|
|
|
|
|
||||||||
Capital Expenditures (in millions): |
|
|
|
|
|
|
|
|
||||||||
Existing stores |
|
$ |
70.5 |
|
|
$ |
72.1 |
|
|
$ |
136.5 |
|
|
$ |
120.1 |
|
Distribution center capacity and improvements |
|
|
32.4 |
|
|
|
3.5 |
|
|
|
46.2 |
|
|
|
11.8 |
|
Information technology |
|
|
30.7 |
|
|
|
20.9 |
|
|
|
49.1 |
|
|
|
51.8 |
|
New and relocated stores and stores not yet opened |
|
|
18.8 |
|
|
|
16.7 |
|
|
|
31.3 |
|
|
|
28.7 |
|
Corporate and other |
|
|
0.5 |
|
|
|
2.1 |
|
|
|
2.2 |
|
|
|
3.6 |
|
Total |
|
$ |
152.9 |
|
|
$ |
115.3 |
|
|
$ |
265.3 |
|
|
$ |
216.0 |
|
(a) |
Comparable store average transaction value changes include the impact of transaction value changes achieved on the current period change in transaction count. |
|
(b) |
Assumes average inventory cost, excluding inventory in transit. |
|
Note: Comparable store metrics percentages may not sum to total due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220720006001/en/
Source:
FAQ
What were Tractor Supply's second quarter 2022 earnings results?
How did comparable store sales perform in Q2 2022 for TSCO?
What is the updated fiscal 2022 outlook for Tractor Supply?
What is Tractor Supply's operating income for Q2 2022?