Tractor Supply Company Reports Record Fourth Quarter and Fiscal Year 2022 Financial Results; Provides Robust Fiscal 2023 Outlook

Tractor Supply Company, the largest rural lifestyle retailer in the United States, today reported record financial results for its fourth quarter (14 weeks) and fiscal year (53 weeks) ended December 31, 2022.

• Company Delivered Strong Fourth Quarter Net Sales Increase of 20.7% and Comparable Store Sales Increase of 8.6% Driven by Both Ticket and Transaction Growth
• Fiscal Year Net Sales Increased 11.6%; Fiscal Year Comparable Store Sales Increased 6.3% with Continued Market Share Gains Across Product Categories
• Fourth Quarter Diluted Earnings per Share (“EPS”) Increased 25.9% to $2.43 and Fiscal Year 2022 Diluted EPS Increased 12.8% to $9.71
• Returned $1.11 Billion of Capital to Shareholders in Fiscal Year 2022

“Tractor Supply had another remarkable year in 2022 as we continued to gain market share and advance our strategic initiatives. For the fourth quarter, while we had an incremental benefit from the late December winter storm, our underlying results were at the high end of our expectations. Our strong results throughout 2022 are directly attributable to the dedication of the more than 50,000 Tractor Supply Team Members who are passionate about Life Out Here. The team achieved significant milestones in the history of Tractor Supply including record sales and profitability and executed meaningful investments to enable future growth. In just over two years since introducing our Life Out Here strategy, we have executed Project Fusion in nearly 30% of our store base, built more than 300 garden centers, expanded our digital and supply chain capabilities and grown our Neighbor’s Club membership 47% to more than 28 million members. These investments are resonating with our customers as we exited the year with strong traffic growth,” said Hal Lawton, Chief Executive Officer of Tractor Supply.

Lawton continued, “Tractor Supply’s needs-based, demand-driven business model has stood the test of time with consistent and sustainable growth. As we celebrate our 85^th anniversary this year, our future couldn’t be brighter. With a solid foundation, we plan to build on our momentum in 2023. We believe we have the right strategies to manage through the near-term and to deliver long-term compounding growth and value creation.”

Fourth Quarter 2022 Results

Net sales for the fourth quarter of 2022 increased 20.7% to $4.01 billion from $3.32 billion in the fourth quarter of 2021. The fourth quarter included an extra sales week as part of the Company’s 53-week calendar in 2022, which represented 6.8 percentage points of the 20.7% sales growth. Comparable store sales increased 8.6%, as compared to an increase of 12.7% in the prior year’s fourth quarter, driven by comparable average ticket growth of 6.3% and comparable average transaction count increase of 2.3%. Comparable store sales growth reflects continued strength in every day, needs-based merchandise, including consumable, usable and edible (“C.U.E.”) products, winter seasonal goods and year-round product categories. The Company estimates comparable store sales in the quarter benefited by approximately two percentage points from the late December winter storm. The acquisition of Orscheln Farm and Home in October 2022 added approximately $80 million to net sales in the fourth quarter.

Gross profit increased 21.7% to $1.36 billion from $1.12 billion in the prior year’s fourth quarter, and gross margin increased 28 basis points to 34.0% from 33.8% in the prior year’s fourth quarter. The gross margin rate increase was primarily attributable to the Company’s price management actions and other margin driving initiatives that were able to offset the impact from year-over-year product cost inflation pressures, product mix from the robust growth of C.U.E. products and higher transportation costs.

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased 21.4% to $1.00 billion from $827.5 million in the prior year’s fourth quarter. As a percent of net sales, SG&A expenses increased 14 basis points to 25.1% from 24.9% in the fourth quarter of 2021. The increase in SG&A as a percent of net sales was primarily attributable to the impact of transaction expenses and early integration costs associated with the Orscheln Farm and Home acquisition. Additionally, the Company’s strategic growth initiatives, including related depreciation and amortization, and investments in team member compensation and benefits contributed to the increase. These items were partially offset by a reduction of COVID-19 response costs and leverage in occupancy and other costs from the increase in comparable store sales.

Operating income increased 22.6% to $359.2 million compared to $293.1 million in the fourth quarter of 2021. Given the transaction expenses and early integration costs recorded in the fourth quarter of 2022, the impact of the Orscheln Farm and Home acquisition was relatively neutral to operating income in the fourth quarter and reduced the operating margin rate by approximately 20 basis points.

The effective income tax rate improved to 22.4% compared to 22.7% in the fourth quarter of 2021.

Net income increased 22.4% to $270.9 million from $221.3 million, and diluted earnings per share increased 25.9% to $2.43 from $1.93 in the fourth quarter of 2021. The benefit of the 53^rd week contributed approximately $0.16 to diluted EPS.

The Company repurchased approximately 0.4 million shares of its common stock for $92.0 million and paid quarterly cash dividends totaling $101.7 million, returning $193.7 million of capital to shareholders in the fourth quarter of 2022.

The Company opened 39 new Tractor Supply stores and six new Petsense by Tractor Supply stores in the fourth quarter of 2022. In October 2022, Tractor Supply acquired 81 stores from Orscheln Farm and Home that will be rebranded to Tractor Supply by the end of 2023.

Fiscal 2022 Results

Net sales for fiscal 2022 increased 11.6% to $14.20 billion from $12.73 billion in fiscal 2021. The fiscal year included an extra sales week as part of the Company’s 53-week calendar in 2022, which represented 1.8 percentage points of the 11.6% sales growth. Comparable store sales increased 6.3% versus a 16.9% increase in fiscal 2021.

Gross profit increased 11.1% to $4.97 billion from $4.48 billion in fiscal 2021, and gross margin decreased 17 basis points to 35.0% from 35.2% in fiscal 2021.

SG&A expenses, including depreciation and amortization, increased 11.6% to $3.54 billion from $3.17 billion in fiscal 2021. As a percent of net sales, SG&A expenses were flat at 24.9% compared to fiscal 2021.

Operating income increased 9.8% to $1.43 billion compared to $1.31 billion in fiscal 2021.

The effective income tax rate was 22.5% compared to 22.1% in fiscal 2021.

Net income increased 9.2% to $1.09 billion from $997.1 million, and diluted EPS increased 12.8% to $9.71 from $8.61 in fiscal 2021. The benefit of the 53rd week contributed approximately $0.16 to diluted EPS.

In fiscal 2022, the Company repurchased approximately 3.4 million shares of its common stock for $700.1 million. The Company also paid quarterly cash dividends totaling $409.6 million during fiscal 2022, returning $1.11 billion of capital to shareholders.

During fiscal 2022, the Company opened 63 new Tractor Supply stores and nine new Petsense by Tractor Supply stores and closed one Petsense by Tractor Supply store. In October 2022, Tractor Supply acquired 81 stores from Orscheln Farm and Home that will be rebranded to Tractor Supply by the end of 2023.

Fiscal 2023 Financial Outlook

The Company is providing its financial guidance for fiscal 2023, a 52-week year compared to fiscal 2022, a 53-week year. This outlook is based on what the Company can reasonably predict at this time.

For fiscal 2023, the Company expects the following:

Net Sales		$15.0 billion to $15.3 billion
Comparable Store Sales		+3.5% to +5.5%
Operating Margin Rate		10.1% to 10.3%
Net Income		$1.13 billion to $1.17 billion
Earnings per Diluted Share		$10.30 to $10.60
Capital Expenditures		$700 million to $775 million
Share Repurchases		$575 million to $675 million

Anticipated capital expenditures include plans in 2023 to open approximately 70 Tractor Supply stores, complete the Orscheln Farm and Home conversions to Tractor Supply, continue the Project Fusion remodels and garden center transformations, and open 10 to 15 new Petsense by Tractor Supply stores. Additionally, the Company celebrated the grand opening of its ninth distribution center on January 18, 2023 and anticipates the build-out of its tenth distribution center in 2023, beginning operations in the spring of 2024.

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 50,000 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 September 24, 2022, the Company operated 2,027 Tractor Supply stores in 49 states, a consumer mobile app and an e-commerce website at TractorSupply.com. In October 2022, Tractor Supply acquired 81 stores from Orscheln Farm and Home that will be rebranded to Tractor Supply by the end of 2023.

Tractor Supply Company also owns and operates Petsense by Tractor Supply, 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 September 24, 2022, the Company operated 180 Petsense by Tractor Supply stores in 23 states. For more information on Petsense by Tractor Supply, visit Petsense.com.

Contact:

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

Source: Tractor Supply Company