Tractor Supply Company Reports Fourth Quarter and Full Year 2012 Results

   Tractor Supply Company Reports Fourth Quarter and Full Year 2012 Results

~ Fourth Quarter Sales Increased to $1.29 Billion and Same-Store Sales
Increased 4.7%

~~ Fourth Quarter Earnings per Share Increased 15.6% to $1.11

~~ Full Year Earnings per Share Increased 26.2% to $3.80

PR Newswire

BRENTWOOD, Tenn., Jan. 30, 2013

BRENTWOOD, Tenn., Jan. 30, 2013 /PRNewswire/ --Tractor Supply Company
(NASDAQ: TSCO), the largest retail farm and ranch store chain in the United
States, today announced financial results for its fourth fiscal quarter and
fiscal year ended December 29, 2012. Additionally, the Company provided a
current outlook for fiscal 2013.

(Logo: http://photos.prnewswire.com/prnh/20120604/MM18615LOGO )

Fourth Quarter Results
Net sales increased to $1.29 billion, or 3.7% over the prior year's 14-week
period (10.8% adjusted for the extra sales week in the prior year's fourth
quarter as part of the Company's 53-week calendar in fiscal 2011). Same-store
sales increased 4.7% compared to a strong 7.6% increase in the prior-year
period (7.1% in the prior-year period adjusted for the one-week calendar shift
in the prior year due to the Company's 53-week calendar in fiscal 2011). The
same-store sales increase was driven primarily by continued strong results in
key consumable, usable and edible (C.U.E.) products, principally animal- and
pet-related merchandise. Same-store sales for the four quarters and full year
of fiscal 2011, adjusted for the one-week calendar shift, are presented in the
attached table of Selected Financial and Operating Information.

As a percent of sales, gross margin improved to 33.0% from 32.5% in the prior
year's fourth quarter. Gross margin dollars increased to $424.6 million from
$403.2 million in the prior year's 14-week fourth quarter. Gross margin rate
continues to benefit from key margin-driving initiatives, including strategic
sourcing, inventory and markdown management and price optimization. The
higher gross margin rate in the fourth quarter of 2012 also reflects, in part,
the impact in 2011 of a one-time charge related to the discontinuation of a
product line from several hundred stores. These increases in gross margin
rate were partially offset by the continued mix shift to lower-margin,
freight-intensive C.U.E. products.

Selling, general and administrative expenses, including depreciation and
amortization, improved to 23.3% of sales compared to 23.5% of sales in the
prior year's fourth quarter. This improvement was achieved despite the
leverage gained in 2011 from the extra sales week. The improvement as a
percent of sales was primarily attributable to expense control related to
store operating costs and lower year-over-year incentive compensation
expense. The reduction as a percent of sales also reflects, in part, the
impact in 2011 of a one-time charge to write down certain e-commerce assets.

Net income for the quarter was $79.5 million, or $1.11 per diluted share,
compared to net income of $70.5 million, or $0.96 per diluted share, in the
fourth quarter of the prior year. As stated in the prior year, the Company
estimates that the 53rd week in fiscal 2011 represented a benefit of
approximately $0.09 per diluted share in the prior year's fourth quarter
results.

The Company opened 25 new stores in the fourth quarter of 2012 compared to 31
new store openings in the prior year's fourth quarter.

Greg Sandfort, President and Chief Executive Officer, stated, "Our fourth
quarter performance demonstrates the underlying strength we have built in our
business, while we continue to drive improved profitability through our
strategic initiatives. Our core C.U.E. categories again posted solid
increases above last year in both sales and units, and our ability to plan,
prepare, execute and react quickly to the trends we are seeing in our business
allowed us to deliver our 19^th consecutive quarter of year-over-year
transaction count increases. Our team executed exceptionally well, delivering
a strong same-store sales gain of 4.7% on top of last year's strong 7.6% comp
increase, managing through less than ideal weather conditions for sales of
cold weather products and despite less benefit from inflation than last year.
We are also delighted with our ability to once again generate double-digit EPS
growth during the fourth quarter on top of a strong double-digit increase last
year."

Full Year Results
Net sales increased to $4.66 billion, or 10.2% over the prior year's 53-week
period (11.6% adjusted for the extra sales week in fiscal 2011 as part of the
Company's 53-week calendar). Same-store sales increased 5.3% compared to an
8.2% increase in fiscal 2011 (8.3% in the prior-year period adjusted for the
one-week calendar shift in the prior year due to the Company's 53-week
calendar in fiscal 2011). As a percent of sales, gross margin improved to
33.6% from 33.2% in the prior year. Gross margin dollars increased to $1.57
billion from $1.41 billion in the prior year's 53-week period.

Selling, general and administrative expenses, including depreciation and
amortization, improved to 24.2% of sales compared to 24.9% of sales in fiscal
2011.

For fiscal 2012, net income was $276.5 million, or $3.80 per diluted share,
compared to net income of $222.7 million, or $3.01 per diluted share, for
fiscal 2011. As stated in the prior year, the Company estimates that the 53rd
week in fiscal 2011 represented a benefit of approximately $0.09 per diluted
share.

The Company opened 93 new stores and closed two stores during fiscal 2012
compared to 85 new store openings and one store closure during fiscal 2011.

Fiscal 2013 Outlook
The Company anticipates net sales for fiscal 2013 will range between $5.07
billion and $5.17 billion, with same-store sales expected to increase 3% to
5%. The Company projects fiscal 2013 full year net income to range from $4.32
to $4.40 per diluted share. This projection includes estimated costs of $0.06
to $0.07 per diluted share associated with the relocation of its Southeast
distribution center and its corporate data center. For the full year, the
Company expects capital expenditures to range between $240 million and $250
million including spending to support 100 to 105 new store openings and
construction of the Company's Southeast distribution center expected to open
in 2013 and new Store Support Center expected to open in 2014.

Mr. Sandfort concluded, "The strength and flexibility of Tractor Supply
Company's business model is exemplified by our ability to manage through a
wide array of variables. Today, we are agile and able to respond more quickly
to our customers' changing needs, creating opportunities in our business. As
we manage the controllables, we will continue to test and improve our
assortments and the in-store experience. We continue to focus on new product
innovation and expansion of existing categories, while providing our customers
with compelling values every day. We have been rewarded in these efforts with
increasing customer loyalty and growing market share. Looking ahead, we
believe our ability to better anticipate and meet our customers' needs will
continue to provide sales momentum for Tractor Supply."

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
TractorSupply.comand can be accessed under the link "Investor Relations."
The webcast will be archived shortly after the conference call concludes and
will be available through February 13, 2013.

About Tractor Supply Company
At December 29, 2012, Tractor Supply Company operated 1,176 stores in 45
states. The Company's stores are focused on supplying the lifestyle needs of
recreational farmers and ranchers. The Company also serves the maintenance
needs of those who enjoy the rural lifestyle, as well as tradesmen and small
businesses. Stores are located in towns outlying major metropolitan markets
and in rural communities. The Company offers the following comprehensive
selection of merchandise: (1)equine, 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 lawn and
garden items, power equipment, gifts and toys;(4)maintenance products for
agricultural and rural use; and (5)work/recreational clothing and footwear.

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 estimated results
of operations, capital expenditures and new store 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 year-end 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 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, the ability to manage expenses, the availability of favorable
credit sources, capital market conditions in general, failure 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 privacy, ongoing and potential
future legal or regulatory proceedings, management of our information systems,
failure to secure or 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 and 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 29, 2012         December 31, 2011         December 29, 2012         December 31, 2011
                 (13 weeks)                (14 weeks)                (52 weeks)                (53 weeks)
                               % of                      % of                      % of                      % of
                               Sales                     Sales                     Sales                     Sales
Net sales      $ 1,286,166     100.0 %   $ 1,240,028     100.0 %   $ 4,664,120     100.0 %   $ 4,232,743     100.0 %
Cost of
merchandise    861,544         67.0      836,862         67.5      3,098,066       66.4      2,825,871       66.8
sold
Gross margin   424,622         33.0      403,166         32.5      1,566,054       33.6      1,406,872       33.2
Selling,
general and
               277,251         21.5      267,959         21.6      1,040,287       22.3      973,822         23.0
administrative
expenses
Depreciation
and            22,595          1.8       23,662          1.9       88,975          1.9       80,347          1.9
amortization
Operating      124,776         9.7       111,545         9.0       436,792         9.4       352,703         8.3
income
Interest       200             —         1,036           0.1       1,055           —         2,087           —
expense, net
Income before  124,576         9.7       110,509         8.9       435,737         9.4       350,616         8.3
income taxes
Income tax     45,089          3.5       39,997          3.2       159,280         3.4       127,876         3.0
expense
Net income     $ 79,487        6.2   %   $ 70,512        5.7   %   $ 276,457       6.0   %   $ 222,740       5.3   %
Net income per
share:
Basic          $ 1.13                    $ 0.99                    $ 3.89                    $ 3.10
Diluted        $ 1.11                    $ 0.96                    $ 3.80                    $ 3.01
Weighted
average shares
outstanding:
Basic            70,218                    71,190                    71,092                    71,777
Diluted          71,733                    73,256                    72,757                    73,921
Dividends
declared per   $ 0.20                    $ 0.12                    $ 0.72                    $ 0.43
common share
outstanding







Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)


                                          December29, 2012  December31, 2011
ASSETS
Current assets:
Cash and cash equivalents                 $   138,630        $   176,965
Restricted cash                           8,400              21,870
Inventories                               908,116            830,819
Prepaid expenses and other current assets 51,808             51,728
Deferred income taxes                     23,098             8,867
Total current assets                      1,130,052          1,090,249
Property and equipment:
Land                                      61,522             36,962
Buildings and improvements                511,188            459,703
Furniture, fixtures and equipment         350,224            312,708
Computer software and hardware            109,121            107,753
Construction in progress                  37,122             19,309
                                          1,069,177          936,435
Accumulated depreciation and amortization (519,179)          (455,580)
Property and equipment, net               549,998            480,855
Goodwill                                  10,258             10,258
Other assets                              16,500             13,470
Total assets                              $   1,706,808      $   1,594,832
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                          $   320,392        $   266,409
Accrued employee compensation             48,400             48,261
Other accrued expenses                    148,316            134,048
Current portion of capital lease          38                 33
obligations
Income taxes payable                      43,359             11,874
Total current liabilities                 560,505            460,625
Capital lease obligations, less current   1,242              1,284
maturities
Deferred income taxes                     1,477              13,827
Deferred rent                             76,236             75,731
Other long-term liabilities               42,374             35,075
Total liabilities                         681,834            586,542
Stockholders' equity:
Common stock                              654                643
Additional paid-in capital                361,759            298,426
Treasury stock                            (709,172)          (437,373)
Retained earnings                         1,371,733          1,146,594
Total stockholders' equity                1,024,974          1,008,290
Total liabilities and stockholders'       $   1,706,808      $   1,594,832
equity



Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


                                          For the Fiscal Year Ended
                                          December29, 2012  December31, 2011
                                          (52 weeks)         (53 weeks)
Cash flows from operating activities:
Net income                                $    276,457       $    222,740
Adjustments to reconcile net income to
net cash provided by
operatingactivities:
Depreciation and amortization             88,975             80,347
Loss on disposition of property and       76                 955
equipment
Stock compensation expense                17,641             15,041
Excess tax benefit of stock options       (25,836)           (17,435)
exercised
Deferred income taxes                     (26,581)           1,856
Change in assets and liabilities:
Inventories                               (77,297)           (94,299)
Prepaid expenses and other current assets (80)               (17,783)
Accounts payable                          53,983             19,021
Accrued employee compensation             139                13,685
Other accrued expenses                    8,828              6,312
Income taxes payable                      57,321             21,040
Other                                     4,676              2,664
Net cash provided by operating activities 378,302            254,144
Cash flows from investing activities:
Capital expenditures                      (152,924)          (166,156)
Proceeds from sale of property and        379                752
equipment
Decrease (increase) in restricted cash    13,470             (21,870)
Proceeds from sale of short-term          —                  15,913
investments
Net cash used in investing activities     (139,075)          (171,361)
Cash flows from financing activities:
Excess tax benefit of stock options       25,836             17,435
exercised
Principal payments under capital lease    (37)               (90)
obligations
Restricted stock units withheld to        (6,821)            (1,115)
satisfy tax obligations
Repurchase of common stock                (271,799)          (179,997)
Net proceeds from issuance of common      26,577             31,460
stock
Cash dividends paid to stockholders       (51,318)           (30,850)
Net cash used in financing activities     (277,562)          (163,157)
Net decrease in cash and cash equivalents (38,335)           (80,374)
Cash and cash equivalents at beginning of 176,965            257,339
period
Cash and cash equivalents at end of       $    138,630       $    176,965
period
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest                                  $    1,219         $    614
Income taxes                              128,306            103,630
Non-cash accruals for construction in     (5,440)            (350)
progress





Selected Financial and Operating Information

(Unaudited)


              Fourth Quarter Ended                 Year Ended
              December     December     December   December     December     December
              29, 2012     31, 2011     31, 2011   29, 2012     31, 2011     31, 2011
              (13 weeks)   (14 weeks)   (13        (52 weeks)   (53 weeks)   (52
                                        weeks)                               weeks)
                                        (adjusted                            (adjusted
                           (originally  for week                (originally  for week
                           reported)    shift) ^                reported)    shift) ^
                                        (a)                                  ^(a)
Sales
Information:
Same-store
sales         4.7       %  7.6       %  7.1     %  5.3       %  8.2       %  8.3     %
increase
New store
sales (% of   5.9       %  5.7       %  5.7     %  5.9       %  5.6       %  5.6     %
total sales)
Average
transaction   $ 46.12      $   45.20    $ 45.16    $ 44.40      $ 43.33      $ 43.37
value
Same-store
average
transaction   1.8       %  3.8       %  3.5     %  2.0       %  3.1       %  3.1     %
value

increase
Same-store
average
transaction   2.7       %  3.6       %  3.5     %  3.0       %  5.0       %  5.0     %
count

increase
Total selling
square        18,893       17,506                  18,893       17,506
footage
(000's)
Store Count
Information:
Beginning of  1,151        1,054                   1,085        1,001
period
New stores    25           31                      93           85
opened
Stores closed —            —                       (2)          (1)
End of period 1,176        1,085                   1,176        1,085
Pre-opening   $ 1,721      $   1,744               $ 7,124      $ 7,334
costs (000's)
Balance Sheet
Information:
Average
inventory per $ 727.4      $   723.4               $ 727.4      $ 723.4
store (000's)
^(b)
Inventory
turns         3.57         3.49                    3.28         3.23
(annualized)
Share
repurchase
program:
 Cost     $ 107,959    $   7,905               $ 271,799    $ 179,997
(000's)
 Average
purchase      $ 88.89      $   69.22               88.94        58.52
price per
share
Capital
Expenditures
(millions):
New and
relocated
stores and    $ 16.7       $   17.7                $ 60.4       $ 44.9
stores not

yet opened
Information   7.8          3.8                     28.2         12.3
technology
Existing      7.0          5.6                     22.2         18.7
stores
Distribution
center
capacity and  6.0          12.0                    16.4         56.3

improvements
Corporate and 2.2          1.6                     13.8         1.8
other
Purchase of
previously
leased and
self          2.0          18.2                    11.9         32.2

developed
stores
Total         $ 41.7       $   58.9                $ 152.9      $ 166.2



2011 SAME-STORE SALES: ORIGINALLY REPORTED AND ADJUSTED FOR WEEK SHIFT ^(a)
(unaudited)
                         FISCAL 2011
                         First        Second       Third       Fourth    Full
                         Quarter      Quarter      Quarter     Quarter   Year
Same-store sales
increase (originally     10.7%        4.6%         11.5%       7.6%      8.2%
reported)
Same-store sales
increase (adjusted for   7.6%         7.1%         11.9%       7.1%      8.3%
week shift)
Impact of week shift     (3.1%)       2.5%         0.4%        (0.5%)    0.1%

^(a) Due to the 53-week fiscal 2011, each quarter of fiscal 2012 starts one
week later than the same quarter of fiscal 2011. The chart above presents
same-store sales for 2011 as originally reported and as adjusted to represent
the same 13-week period as the 2012 fiscal quarters. The adjusted 13-week
periods end on April 2, 2011, July 2, 2011, October 1, 2011 and December 31,
2011, respectively.
^(b) Assumes average inventory cost, excluding inventory in transit.







SOURCE Tractor Supply Company

Website: http://www.TractorSupply.com
Contact: Anthony F. Crudele, Chief Financial Officer, or Randy Guiler,
Director, Investor Relations, +1-615-440-4000; or Investors and Media:
Jennifer Milan, or Daniel Haykin, FTI Consulting, +1-212-850-5600
 
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