BRENTWOOD, TN--(Marketwired - January 27, 2016) -
Tractor Supply Company
(
Fourth Quarter Results
As previously reported in the Company's Business Update press release on January 12, 2016, net sales for the fourth quarter increased 3.9% to $1.65 billion from $1.58 billion in the prior year's fourth quarter. Comparable store sales decreased 1.4% for the quarter compared to the prior year's fourth quarter increase of 5.3%. Comparable store transaction counts increased by 0.6%, which represents the 31st
consecutive quarter of transaction count growth.
The same store sales decrease in the fourth quarter was primarily driven by weakness in the key cold-weather seasonal categories of heating (stoves and fuel) and insulated outerwear, particularly in the Northeast and Midwest regions. Sales were also impacted by softness in seasonal big ticket items such as snow blowers, log splitters and generators. The weakness in seasonal categories was partially offset by continued sales strength in year-round basic products such as livestock feed, pet food and hardware.
Gross profit increased 4.0% to $561.0 million from $539.6 million in the prior year's fourth quarter, and gross margin remained relatively flat to the prior year at 34.1%. Strong price and markdown management was offset by a higher sales mix of consumable, usable, and edible (C.U.E.) products, which carry below chain average gross margins.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, increased 7.1% to $387.7 million from $361.9 million in the prior year's fourth quarter. As a percent of net sales, SG&A expenses increased 80 basis points to 23.6%. The increase as a percentage of net sales was primarily attributable to the decline in comparable store sales and the incremental costs associated with the Company's new distribution facility in Casa Grande, Arizona. These increases were partially offset by lower year-over-year incentive compensation expense as a percentage of sales.
Net income decreased 0.3% to $111.7 million from $112.1 million and diluted earnings per share increased 1.2% to $0.82 from $0.81 in the fourth quarter of the prior year.
The Company opened 26 new stores and closed three stores, two of which were Del's stores, in the fourth quarter of 2015 compared to 22 new store openings and one store closure in the prior year's fourth quarter. In addition, the Company began shipping merchandise to stores from its new distribution facility in Casa Grande, Arizona in the fourth quarter.
Greg Sandfort, President and Chief Executive Officer, stated, "While our fourth quarter sales were below our expectations due principally to the record warm temperatures across most of the country, we effectively managed our markdown cadence and inventory flow throughout the period. As temperatures have normalized, sell-through of cold-weather seasonal items has improved. Further, we believe we have a solid plan in place to meet our customers' seasonal needs as we transition to the important spring selling season."
Mr. Sandfort continued, "We have a very loyal customer who continues to shop our stores for their everyday basic needs. We continue to take a long-term, balanced approach to managing and growing the business and believe we have the strategies and tools in place to meet our annual target of mid-teens earnings per share growth in 2016."
Fiscal 2015 Results
Net sales increased 9.0% to $6.23 billion from $5.71 billion in fiscal 2014. Comparable store sales increased 3.1% versus a 3.8% increase in fiscal 2014. Gross profit increased 9.9% to $2.14 billion from $1.95 billion, and gross margin increased 30 basis points to 34.4% of sales from 34.1% of sales in fiscal 2014.
Selling, general and administrative expenses, including depreciation and amortization, increased 9.7% to $1.49 billion and increased as a percent of sales to 24.0% compared to 23.8% for fiscal 2014.
Net income increased 10.7% to $410.4 million from $370.9 million and net income per diluted share increased 12.8% to $3.00 from $2.66 for fiscal 2014.
The Company opened 114 new stores and closed eight stores, five of which were Del's stores, in fiscal 2015 compared to 107 new store openings and one store closure during fiscal 2014.
Fiscal 2016 Outlook
The Company is providing the following guidance for the results of operations expected for fiscal 2016:
| Net Sales | $6.9 billion - $7.0 billion | |
| Comparable Store Sales | 3.5% - 5.0% | |
| Net Income | $455 million - $467 million | |
| Earnings per Diluted Share | $3.40 - $3.48 | |
| Capital Expenditures | $230 million - $250 million | |
Included in this forecast are additional expenses related to the first year of operations for the new Casa Grande, Arizona distribution center and the continued transition of the Company's Del's stores to Tractor Supply stores. The forecast also considers the impact of the additional 53rd week in fiscal 2016. Anticipated capital expenditures include spending to support approximately 120 new store openings.
Conference Call Information
Tractor Supply Company will be hosting a conference call at 5:00 p.m. Eastern Time today to discuss the quarterly and full year results. The call will be broadcast simultaneously over the Internet on the Company's website at IR.TractorSupply.com.
Please allow extra time prior to the call to visit the site and download the streaming media software required to listen to the Internet broadcast.
A replay of the webcast will also be available at IR.TractorSupply.com shortly after the conference call concludes.
About Tractor Supply Company
At December 26, 2015, Tractor Supply Company operated 1,488 stores in 49 states. The Company's stores are focused on supplying the lifestyle needs of recreational farmers and ranchers and others who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located primarily in towns outlying major metropolitan markets and in rural communities. The Company offers the following comprehensive selection of merchandise: (1) equine, livestock, 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 heating, lawn and garden items, power equipment, gifts and toys; (4) work/recreational clothing and footwear; and (5) maintenance products for agricultural and rural use.
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 sales and earnings growth, estimated results of operations, capital expenditures, marketing, merchandising and strategic initiatives and new store and distribution center 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 timing and 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, failure of an acquisition to produce anticipated results, the ability to successfully manage expenses and execute our key gross margin enhancing initiatives, the availability of favorable credit sources, capital market conditions in general, the ability 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 information systems or theft of employee or customer data, ongoing and potential future legal or regulatory proceedings, management of our information systems, failure to 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, 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)
| Condensed Consolidated Statements of Income |
| (Unaudited) |
| (in thousands, except per share amounts) |
| FOURTH QUARTER ENDED | YEAR ENDED | ||||||||||||||||||||||||
| December 26, 2015 | December 27, 2014 | December 26, 2015 | December 27, 2014 | ||||||||||||||||||||||
| % of | % of | % of | % of | ||||||||||||||||||||||
| Sales | Sales | Sales | Sales | ||||||||||||||||||||||
| Net sales | $ | 1,646,610 | 100.0 | % | $ | 1,584,254 | 100.0 | % | $ | 6,226,507 | 100.0 | % | $ | 5,711,715 | 100.0 | % | |||||||||
| Cost of merchandise sold | 1,085,609 | 65.9 | 1,044,659 | 66.0 | 4,083,333 | 65.6 | 3,761,300 | 65.9 | |||||||||||||||||
| Gross profit | 561,001 | 34.1 | 539,595 | 34.0 | 2,143,174 | 34.4 | 1,950,415 | 34.1 | |||||||||||||||||
| Selling, general and administrative expenses | 354,888 | 21.6 | 331,780 | 20.9 | 1,369,097 | 22.0 | 1,246,308 | 21.8 | |||||||||||||||||
| Depreciation and amortization | 32,825 | 2.0 | 30,114 | 1.9 | 123,569 | 2.0 | 114,635 | 2.0 | |||||||||||||||||
| Operating income | 173,288 | 10.5 | 177,701 | 11.2 | 650,508 | 10.4 | 589,472 | 10.3 | |||||||||||||||||
| Interest expense, net | 411 | - | 618 | - | 2,891 | - | 1,885 | - | |||||||||||||||||
| Income before income taxes | 172,877 | 10.5 | 177,083 | 11.2 | 647,617 | 10.4 | 587,587 | 10.3 | |||||||||||||||||
| Income tax expense | 61,165 | 3.7 | 65,021 | 4.1 | 237,222 | 3.8 | 216,702 | 3.8 | |||||||||||||||||
| Net income | $ | 111,712 | 6.8 | % | $ | 112,062 | 7.1 | % | $ | 410,395 | 6.6 | % | $ | 370,885 | 6.5 | % | |||||||||
| Net income per share: | |||||||||||||||||||||||||
| Basic | $ | 0.83 | $ | 0.82 | $ | 3.03 | $ | 2.69 | |||||||||||||||||
| Diluted | $ | 0.82 | $ | 0.81 | $ | 3.00 | $ | 2.66 | |||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||
| Basic | 134,338 | 136,194 | 135,582 | 137,769 | |||||||||||||||||||||
| Diluted | 135,506 | 137,733 | 136,845 | 139,435 | |||||||||||||||||||||
| Dividends declared per common share outstanding | $ | 0.20 | $ | 0.16 | $ | 0.76 | $ | 0.61 | |||||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
| December 26, 2015 | December 27, 2014 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 63,813 | $ | 51,134 | ||||||
| Inventories | 1,284,375 | 1,115,450 | ||||||||
| Prepaid expenses and other current assets | 87,510 | 66,444 | ||||||||
| Income taxes receivable | 3,763 | - | ||||||||
| Deferred income taxes | 45,970 | 40,962 | ||||||||
| Total current assets | 1,485,431 | 1,273,990 | ||||||||
| Property and equipment: | ||||||||||
| Land | 86,991 | 79,571 | ||||||||
| Buildings and improvements | 814,802 | 698,462 | ||||||||
| Furniture, fixtures and equipment | 523,383 | 453,692 | ||||||||
| Computer software and hardware | 180,020 | 154,818 | ||||||||
| Construction in progress | 38,720 | 30,803 | ||||||||
| Property and equipment, gross | 1,643,916 | 1,417,346 | ||||||||
| Accumulated depreciation and amortization | (796,340 | ) | (696,346 | ) | ||||||
| Property and equipment, net | 847,576 | 721,000 | ||||||||
| Goodwill | 10,258 | 10,258 | ||||||||
| Deferred income taxes | 9,224 | 8,782 | ||||||||
| Other assets | 18,337 | 20,541 | ||||||||
| Total assets | $ | 2,370,826 | $ | 2,034,571 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 427,249 | $ | 370,823 | ||||||
| Accrued employee compensation | 42,684 | 37,056 | ||||||||
| Other accrued expenses | 195,024 | 182,565 | ||||||||
| Current portion of capital lease obligations | 878 | 213 | ||||||||
| Income taxes payable | 5,449 | 12,436 | ||||||||
| Revolving credit loan | 150,000 | - | ||||||||
| Total current liabilities | 821,284 | 603,093 | ||||||||
| Capital lease obligations, less current maturities | 16,992 | 4,957 | ||||||||
| Deferred rent | 84,793 | 79,807 | ||||||||
| Other long-term liabilities | 54,463 | 53,153 | ||||||||
| Total liabilities | 977,532 | 741,010 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 1,352 | 1,342 | ||||||||
| Additional paid-in capital | 596,131 | 510,997 | ||||||||
| Treasury stock | (1,429,790 | ) | (1,137,085 | ) | ||||||
| Retained earnings | 2,225,601 | 1,918,307 | ||||||||
| Total stockholders' equity | 1,393,294 | 1,293,561 | ||||||||
| Total liabilities and stockholders' equity | $ | 2,370,826 | $ | 2,034,571 | ||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
| YEAR ENDED | ||||||||||
| December 26, 2015 | December 27, 2014 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net income | $ | 410,395 | $ | 370,885 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 123,569 | 114,635 | ||||||||
| Loss on disposition of property and equipment | 315 | 389 | ||||||||
| Share-based compensation expense | 19,420 | 16,173 | ||||||||
| Excess tax benefit of stock options exercised | (27,032 | ) | (18,850 | ) | ||||||
| Deferred income taxes | (5,450 | ) | (19,814 | ) | ||||||
| Change in assets and liabilities: | ||||||||||
| Inventories | (168,925 | ) | (136,142 | ) | ||||||
| Prepaid expenses and other current assets | (21,066 | ) | (9,085 | ) | ||||||
| Accounts payable | 56,426 | 54,336 | ||||||||
| Accrued employee compensation | 5,628 | (13,517 | ) | |||||||
| Other accrued expenses | 11,252 | 20,365 | ||||||||
| Income taxes | 16,282 | 21,862 | ||||||||
| Other | 8,366 | 7,941 | ||||||||
| Net cash provided by operating activities | 429,180 | 409,178 | ||||||||
| Cash flows from investing activities: | ||||||||||
| Capital expenditures | (236,496 | ) | (160,613 | ) | ||||||
| Proceeds from sale of property and equipment | 584 | 331 | ||||||||
| Net cash used in investing activities | (235,912 | ) | (160,282 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Borrowings under revolving credit agreement | 680,000 | 355,000 | ||||||||
| Repayments under revolving credit agreement | (530,000 | ) | (355,000 | ) | ||||||
| Excess tax benefit of stock options exercised | 27,032 | 18,850 | ||||||||
| Principal payments under capital lease obligations | (507 | ) | (114 | ) | ||||||
| Repurchase of shares to satisfy tax obligations | (2,997 | ) | (4,766 | ) | ||||||
| Repurchase of common stock | (292,705 | ) | (298,497 | ) | ||||||
| Net proceeds from issuance of common stock | 41,689 | 28,083 | ||||||||
| Cash dividends paid to stockholders | (103,101 | ) | (84,061 | ) | ||||||
| Net cash used in financing activities | (180,589 | ) | (340,505 | ) | ||||||
| Net change in cash and cash equivalents | 12,679 | (91,609 | ) | |||||||
| Cash and cash equivalents at beginning of period | 51,134 | 142,743 | ||||||||
| Cash and cash equivalents at end of period | $ | 63,813 | $ | 51,134 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||||
| Cash paid during the period for: | ||||||||||
| Interest | $ | 2,283 | $ | 906 | ||||||
| Income taxes | 226,968 | 213,637 | ||||||||
| Supplemental disclosures of non-cash activities: | ||||||||||
| Property and equipment acquired through capital lease | $ | 13,207 | $ | 4,042 | ||||||
| Non-cash accruals for construction in progress | 16,050 | 14,843 | ||||||||
| Selected Financial and Operating Information | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| FOURTH QUARTER ENDED | YEAR ENDED | ||||||||||||||||
| December 26, 2015 | December 27, 2014 | December 26, 2015 | December 27, 2014 | ||||||||||||||
| Sales Information: | |||||||||||||||||
| Comparable store sales increase | (1.4 | )% | 5.3 | % | 3.1 | % | 3.8 | % | |||||||||
| New store sales (% of total sales) | 5.4 | % | 5.9 | % | 5.6 | % | 6.2 | % | |||||||||
| Average transaction value | $ | 45.86 | $ | 46.62 | $ | 44.87 | $ | 44.84 | |||||||||
| Comparable store average transaction value (decrease) increase | (1.9 | )% | 2.3 | % | (0.2 | )% | 0.6 | % | |||||||||
| Comparable store average transaction count increase | 0.6 | % | 3.0 | % | 3.3 | % | 3.2 | % | |||||||||
| Total selling square footage (000's) | 23,938 | 22,176 | 23,938 | 22,176 | |||||||||||||
| Store Count Information: | |||||||||||||||||
| Beginning of period | 1,465 | 1,361 | 1,382 | 1,276 | |||||||||||||
| New stores opened | 26 | 22 | 114 | 107 | |||||||||||||
| Stores closed | (3 | ) | (1 | ) | (8 | ) | (1 | ) | |||||||||
| End of period | 1,488 | 1,382 | 1,488 | 1,382 | |||||||||||||
| Pre-opening costs (000's) | $ | 1,986 | $ | 1,753 | $ | 9,571 | $ | 8,888 | |||||||||
| Balance Sheet Information: | |||||||||||||||||
| Average inventory per store (000's) (a) | $ | 820.1 | $ | 752.7 | $ | 820.1 | $ | 752.7 | |||||||||
| Inventory turns (annualized) | 3.23 | 3.50 | 3.23 | 3.32 | |||||||||||||
| Share repurchase program: | |||||||||||||||||
| Cost (000's) | $ | 48,749 | $ | 54,115 | $ | 292,705 | $ | 298,497 | |||||||||
| Average purchase price per share | $ | 86.34 | $ | 62.35 | $ | 85.70 | $ | 63.99 | |||||||||
| Capital Expenditures (millions): | |||||||||||||||||
| New and relocated stores and stores not yet opened | $ | 29.8 | $ | 18.1 | $ | 96.7 | $ | 80.8 | |||||||||
| Distribution center capacity and improvements | 18.9 | 7.6 | 80.2 | 9.2 | |||||||||||||
| Information technology | 15.0 | 4.3 | 35.8 | 22.7 | |||||||||||||
| Existing stores | 9.3 | 4.0 | 23.1 | 20.0 | |||||||||||||
| Corporate and other | - | 1.2 | 0.7 | 27.9 | |||||||||||||
| Total | $ | 73.0 | $ | 35.2 | $ | 236.5 | $ | 160.6 | |||||||||
| (a) | Assumes average inventory cost, excluding inventory in transit. |
Contact Information:
Anthony F. Crudele
Chief Financial Officer
Christine Skold
Vice President, Investor Relations
(615) 440-4000
Investors:
John Rouleau
Rachel Schacter
ICR
Media:
Alecia Pulman
Brittany Rae Fraser
ICR
(203) 682-8200