TRACTOR SUPPLY CO /DE/

Previous wording

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the “2024 Form 10-K”) and subsequent Quarterly Reports on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements and information. The forward-looking statements included herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). All statements, other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including sales and earnings growth, new store growth, estimated results of operations in future periods (including, but not limited to, sales, comparable store sales, operating margins, net income, and earnings per diluted share), the declaration and payment of dividends, the timing and amount of share repurchases, future capital expenditures (including their timing, amount and nature), sale-leasebacks, acquisitions, business strategy, strategic initiatives, expansion and growth of our business operations, and other such matters are forward-looking statements. Forward-looking statements are usually identified by or are associated with such words as “will,” “plans,” “intend,” “expect,” “believe,” “anticipate,” “optimistic,” “forecasted” and similar terminology. These forward-looking statements may be affected by certain risks and uncertainties, any one, or a combination of which, could materially affect the results of our operations. To take advantage of the safe harbor provided by the PSLRA, we have identified certain factors, in Part I, Item 1A. “Risk Factors” in our 2024 Form 10-K, including the impact of the recent tariff announcements and the corresponding macroeconomic pressures, which may cause actual results to differ materially from those expressed in any forward-looking statements. These “Risk Factors” may be updated from time to time in our quarterly reports on Form 10-Q or other subsequent filings with the SEC.

Current wording

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the “2024 Form 10-K”) and subsequent Quarterly Reports on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements and information. The forward-looking statements included herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). All statements, other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including sales and earnings growth, new store growth, estimated results of operations in future periods (including, but not limited to, sales, comparable store sales, operating margins, net income, and earnings per diluted share), the declaration and payment of dividends, the timing and amount of share repurchases, future capital expenditures (including their timing, amount and nature), sale-leasebacks, acquisitions, business strategy, strategic initiatives, expansion and growth of our business operations, and other such matters are forward-looking statements. Forward-looking statements are usually identified by or are associated with such words as “will,” “plans,” “intend,” “expect,” “believe,” “anticipate,” “optimistic,” “forecasted” and similar terminology. These forward-looking statements may be affected by certain risks and uncertainties, any one, or a combination of which, could materially affect the results of our operations. To take advantage of the safe harbor provided by the PSLRA, we have identified certain factors in Part I, Item 1A. “Risk Factors” in our 2024 Form 10-K and herein, including the impact of the recent tariff announcements and the corresponding macroeconomic pressures, which may cause actual results to differ materially from those expressed in any forward-looking statements. These “Risk Factors” may be updated from time to time in our quarterly reports on Form 10-Q or other subsequent filings with the SEC.

Previous wording

Sales from new stores, including Allivet sales, were $97.9 million for the first quarter of fiscal 2025, which represented 2.9 percentage points of the 2.1% net sales increase over first quarter fiscal 2024 net sales. For the first quarter of fiscal 2024, sales from stores open less than one year were $65.3 million, which represented 2.0 percentage points of the 2.9% increase over first quarter fiscal 2023 net sales.

Current wording

Sales from new stores, including Allivet sales, were $126.7 million for the second quarter of fiscal 2025, which represented 3.0 percentage points of the 4.5% net sales increase over second quarter fiscal 2024 net sales. For the second quarter of fiscal 2024, sales from stores open less than one year were $83.7 million, which represented 2.0 percentage points of the 1.5% increase over second quarter fiscal 2023 net sales.

Previous wording

Gross profit increased 2.8% to $1.26 billion for the first quarter of fiscal 2025 from $1.22 billion for the first quarter of fiscal 2024. As a percent of net sales, gross margin in the first quarter of fiscal 2025 increased 25 basis points to 36.2% from 36.0% in the first quarter of fiscal 2024. The gross margin rate increase was primarily attributable to disciplined product cost management and the continued execution of an everyday low price strategy.

Current wording

Gross profit increased 5.4% to $1.64 billion for the second quarter of fiscal 2025 from $1.56 billion for the second quarter of fiscal 2024. As a percent of net sales, gross margin in the second quarter of fiscal 2025 increased 31 basis points to 36.9% from 36.6% in the second quarter of fiscal 2024. The gross margin rate increase was primarily attributable to disciplined product cost management and the continued execution of an everyday low price strategy.

Previous wording

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased 5.1% to $1.01 billion for the first quarter of fiscal 2025 from $957.7 million for the first quarter of fiscal 2024. As a percent of net sales, SG&A expenses increased 81 basis points to 29.0% from 28.2% in the first quarter of fiscal 2024. The increase in SG&A as a percent of net sales was primarily attributable to planned growth investments, which included higher depreciation and amortization and the operations of the Company’s tenth distribution center, and deleverage of fixed costs given the comparable store sales decline. These factors were partially offset by ongoing focus on productivity and cost control, as well as a modest benefit from the Company’s ongoing sale-leaseback strategy.

Current wording

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased 6.8% to $1.06 billion for the second quarter of fiscal 2025 from $994.2 million for the second quarter of fiscal 2024. As a percent of net sales, SG&A expenses increased 51 basis points to 23.9% from 23.4% in the second quarter of fiscal 2024. The increase in SG&A as a percent of net sales was primarily attributable to planned growth investments and modest deleverage of fixed costs given the level of comparable store sales. These factors were partially offset by an ongoing focus on productivity and cost control, and to a lesser extent, a modest benefit from the Company’s ongoing sale-leaseback strategy.

Previous wording

The effective income tax rate was 21.8% in the first quarter of fiscal 2025 compared to 21.1% in the first quarter of fiscal 2024. The increase in the effective income tax rate in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was driven primarily by a decrease in stock compensation activity.

Current wording

The effective income tax rate was 23.2% in the second quarter of fiscal 2025 compared to 22.7% in the second quarter of fiscal 2024. The increase in the effective income tax rate in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 was driven primarily by a decrease in stock compensation activity.

Previous wording

During the first quarter of fiscal 2025, we repurchased approximately 1.7 million shares of the Company’s common stock at a total cost of $94.0 million, excluding the 1% excise tax, as part of our share repurchase program and paid quarterly cash dividends totaling $122.4 million, returning $216.4 million of capital to our stockholders.

Current wording

During the second quarter of fiscal 2025, we repurchased approximately 1.4 million shares of the Company’s common stock at a total cost of $73.9 million, excluding the 1% excise tax, as part of our share repurchase program and paid quarterly cash dividends totaling $122.0 million, returning $195.9 million of capital to our stockholders.

Previous wording

Net sales for the first quarter of fiscal 2025 increased 2.1% to $3.47 billion from $3.39 billion in the first quarter of fiscal 2024. The increase in net sales was driven by new store openings and the contribution from Allivet, partially offset by the comparable store sales decrease of 0.9%. In the first quarter of fiscal 2024, net sales increased 2.9% and comparable store sales increased 1.1%.

Current wording

Net sales for the first six months of fiscal 2025 increased 3.5% to $7.91 billion from $7.64 billion in the first six months of fiscal 2024. The increase in net sales was driven primarily by new store openings and the 0.5% increase in comparable store sales. In the first six months of fiscal 2024, net sales increased 2.1% and comparable store sales increased 0.2%.

Previous wording

The comparable store sales results for the first quarter of fiscal 2025 included a comparable average transaction count increase of 2.1% and a comparable average ticket decrease of 2.9%. Comparable average transaction count growth reflects strength in year-round categories including consumable, usable and edible products and winter seasonal merchandise. Transaction growth was offset by a lower average ticket, driven primarily by a negative product mix from lower spring seasonal goods including related big ticket categories.

Current wording

The comparable store sales results for the first six months of fiscal 2025 included an increase in comparable average transaction count of 1.5%, partially offset by a decrease in comparable average transaction value of 1.0%. Comparable store sales growth was driven primarily by performance in year-round categories including consumable, usable and edible (C.U.E.) products along with a strong demand in the first quarter for winter seasonal products. These gains were partially offset by softness in big ticket and select discretionary categories.

Previous wording

Net income for the first quarter of fiscal 2025 decreased 9.5% to $179.4 million, or $0.34 per diluted share, as compared to net income of $198.2 million, or $0.37 per diluted share, for the first quarter of fiscal 2024.

Current wording

Net income for the first six months of fiscal 2025 decreased 2.2% to $609.4 million, or $1.14 per diluted share, as compared to net income of $623.4 million, or $1.15 per diluted share, for the first six months of fiscal 2024.

Previous wording

Operating activities provided net cash of $216.8 million and $257.4 million in the first three months of fiscal 2025 and fiscal 2024, respectively. The $40.6 million decrease in net cash provided by operating activities in the first three months of fiscal 2025 compared to the first three months of fiscal 2024 is due to changes in the following operating activities (in millions):

Current wording

Operating activities provided net cash of $1.00 billion and $817.3 million in the first six months of fiscal 2025 and fiscal 2024, respectively. The $185.2 million increase in net cash provided by operating activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 is due to changes in the following operating activities (in millions):

Previous wording

The $40.6 million decrease in net cash provided by operating activities in the first three months of fiscal 2025 compared to the first three months of fiscal 2024 was primarily driven by the change in accrued expenses, resulting from the timing of accruals and related payments, as well as the decrease in net income year over year.

Current wording

The $185.2 million increase in net cash provided by operating activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 was primarily driven by our management of inventory and accounts payable.

Previous wording

Investing activities used net cash of $261.1 million and $152.3 million in the first three months of fiscal 2025 and fiscal 2024, respectively. The $108.7 million increase in net cash used in investing activities in the first three months of fiscal 2025 compared to the first three months of fiscal 2024 is due to changes in the following investing activities (in millions):

Current wording

Investing activities used net cash of $448.7 million and $331.3 million in the first six months of fiscal 2025 and fiscal 2024, respectively. The $117.4 million increase in net cash used in investing activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 is due to changes in the following investing activities (in millions):

Previous wording

The capital expenditures for new stores, relocated stores and stores not yet opened in the first three months of fiscal 2025 included 15 new Tractor Supply stores compared to 17 new Tractor Supply stores during the first three months of fiscal 2024. The Company also opened two new Petsense by Tractor Supply stores during the first three months of fiscal 2025 compared to four new stores during the first three months of fiscal 2024.

Current wording

The increase in capital expenditures for new stores, relocated stores and stores not yet opened in the first six months of fiscal 2025 is primarily driven by the increase in the construction of owned, fixed-fee development stores. Capital expenditures for the first six months of fiscal 2025 included the opening of 39 new Tractor Supply stores compared to 38 new Tractor Supply stores during the first six months of fiscal 2024. The Company also opened four new Petsense by Tractor Supply stores during the first six months of fiscal 2025 compared to seven new stores during the first six months of fiscal 2024.

Previous wording

The decrease in capital expenditures for existing stores in the first three months of fiscal 2025 as compared to the first three months of fiscal 2024 primarily reflects the timing of spend related to internal space productivity and side lot garden center transformations.

Current wording

The decrease in capital expenditures for existing stores in the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 primarily reflects the timing of spend related to internal space productivity and side lot garden center transformations.

Previous wording

Capital expenditures for information technology represent continued support of our store growth and our Digital initiatives, as well as improvements in security and compliance and other strategic initiatives.

Current wording

Capital expenditures for information technology represent continued support of our store growth and our Digital initiatives, as well as improvements in security and compliance and other strategic initiatives including our Final Mile initiative.

Previous wording

Financing activities provided net cash of $24.5 million in the first three months of fiscal 2025 compared to using net cash of $238.1 million in the first three months of fiscal 2024. The $262.6 million change in net cash provided by financing activities in the first three months of fiscal 2025 compared to the first three months of fiscal 2024 is due to changes in the following (in millions):

Current wording

Financing activities used net cash of $579.6 million in the first six months of fiscal 2025 compared to using net cash of $488.3 million in the first six months of fiscal 2024. The $91.3 million change in net cash used in financing activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 is due to changes in the following (in millions):

Previous wording

The $262.6 million change in net cash provided by financing activities in the first three months of fiscal 2025 compared to the first three months of fiscal 2024 is primarily due to incremental borrowing under the Company’s Revolving Credit Facility in the current period.

Current wording

The $91.3 million change in net cash used in financing activities in the first six months of fiscal 2025 compared to the first six months of fiscal 2024 is primarily due to incremental borrowing under the Company’s Revolving Credit Facility in the current period, partially offset by a decrease in the repurchase of common stock.

Previous wording

During the first three months of fiscal 2025 and fiscal 2024, the Company's Board of Directors declared the following cash dividends:

Current wording

During the first six months of fiscal 2025 and fiscal 2024, the Company's Board of Directors declared the following cash dividends:

Previous wording

The Company’s Board of Directors has authorized common stock repurchases under a share repurchase program which was announced in February 2007. The aggregate total authorized amount of the program, which was increased by $1.00 billion on February 12, 2025, is currently $7.50 billion, exclusive of any fees, commissions, or other expenses related to such repurchases. The share repurchase program does not have an expiration date. The repurchases may be made from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions. Repurchased shares are accounted for at cost and will be held in treasury for future issuance. The program may be limited, temporarily paused, or terminated at any time without prior notice. As of March 29, 2025, the Company had remaining authorization under the share repurchase program of $1.39 billion, exclusive of any fees, commissions, or other expenses.

Current wording

The Company’s Board of Directors has authorized common stock repurchases under a share repurchase program which was announced in February 2007. The aggregate total authorized amount of the program, which was increased by $1.00 billion on February 12, 2025, is currently $7.50 billion, exclusive of any fees, commissions, or other expenses related to such repurchases. The share repurchase program does not have an expiration date. The repurchases may be made from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions. Repurchased shares are accounted for at cost and will be held in treasury for future issuance. The program may be limited, temporarily paused, or terminated at any time without prior notice. As of June 28, 2025, the Company had remaining authorization under the share repurchase program of $1.32 billion, exclusive of any fees, commissions, or other expenses.

Previous wording

The following table provides the number of shares repurchased, average price paid per share, and total cost of share repurchases pursuant to our publicly announced repurchase plan during the fiscal three months ended March 29, 2025 and March 30, 2024, respectively (in thousands, except per share amounts):

Current wording

The following table provides the number of shares repurchased, average price paid per share, and total cost of share repurchases pursuant to our publicly announced repurchase plan during the fiscal three and six months ended June 28, 2025 and June 29, 2024, respectively (in thousands, except per share amounts):