TSCO - Earnings call transcript Q1 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Tractor Supply Company’s Conference Call to the First Quarter 2022 Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] Please be advised that the reproduction of this call in whole or in part is not permitted without written authorization of Tractor Supply Company.

As a reminder, this call is being recorded. to host like Mrs. today’s now would introduce for your call, I Winn of Company. Tractor President Senior and Mary Vice for Investor Pilkington, Public Relations Supply Winn, go Mary please ahead.

Mary Winn Pilkington

to Thanks operator. all you’re taking morning, you, well. today, everyone. Thank the I Good doing time join hope us and for

us CFO. the our call the join call website we’ve Please Officer, your Seth release. Estep, our earnings up and session. Hal our Chief prepared will CEO; Kurt accompany Lawton, to slide for the On after our remarks, EVP note Merchandising a are today’s made our Barton, presentation today question-and-answer And for we’ll open questions. on available that supplemental

may to operating and provisions uncertainties, beyond let the In our of control. Litigation future Private contain reference significant including these statements the of Securities are performance call many Act and certain are that risks cases, safe Now, risks forward-looking me and subject harbor Company. the under Reform financial This the XXXX. uncertainties

only and and release We for prepared accurate filings to the will Although undertakes this any can The give expectations the it any Tractor of that correct, expectations such will discussed to no the are assurance of Supply Commission. remain be reflected Exchange forward-looking Securities or contained obligation statements prove remarks later company and discussed. in call. update forward-looking the no operative reasonable, statements time information its believes its Q&A. the that information time. differ materially statements may results the are more risk actual assume could issued the this factors Investors statements from differ to in expectations. allow results a at the to at actual that in is the shortened as from today cause in press Important of with should reflected date end in those call Company’s not materially forward-looking included

one limit that Given of participate, we ask respectfully to to number yourself the want question. you people who

free feel the to your please I appreciate questions, additional have cooperation. queue. in get you If back

for your will the We available attention after be and time follow-up. Thank this you morning. call for

pleasure it’s Hal. to to over my call Now, turn the

Hal Lawton

everyone, the chain team In Thank you, year’s last Mary Supply delivering years. have demonstrated to joining Winn, you for strong Tractor pressures the for the Here Out begin two good were conflict customers relative impacts today. ways, of like at thanking by been Omicron lapping came particularly again ongoing supplier two as dependable by the and robust for this the supply the challenge team last quarter stepped lifestyle. they performance results. of of what us be the and significant to up the performance, I’d to best and the grit some constraints, of and our variant, over they last The determination matter Ukraine. overcame may course No inflationary there a the the January, for team, thank which as in morning, our tragic in the the exacerbated both

mission supply Our to the and as to values partners occasion strive continued members, and our to day. rise vendors we other live our team every chain have

a Speaking long-term business us we ESG value makes and absolute provides of report actions. related on the report to of our a This gallons that this on have Of great and communities by to reduce new areas water sense XX detailed positive an efforts. our on our of Supply. water the the call information usage is our note, in progress in Life enhances the goal and week, establishment And significantly allows setting ESG of XXXX. in recognition these disclosure for and Week, issued Report. Tractor transparency for Here our by footprint Stewards targets values, sustainability home. to impact Sustainability world ourselves million our level creates comprehensive Out Earth and mission It we environmental

As a to improvement constant company, journey. this on we committed remain purpose-driven

to note. X.X% up We comparable business out was net of first the started turn X.X%. grew sales review The strong Now, sales let’s with for X.X% a of Diluted store an year-over-year. the quarter by a XXXX. EPS $X.XX, on increase of year

store was ticket sales transactions growth comparable strong X.X%. of driven X.X%, by in of a Our by offset growth decline

business remarkable Given comp year. the QX as our last in had a reminder, and a strength in last XX.X% year, we

with materially combination in shared inflation. We factors, quarter are and benefited growth. the our favorable year, very with we of in Last from weather pleased sales particular you a we that spending, stimulus

getting these lapping factors, about of This the season a quarter, quarter in sales navigated successfully inflation, slow XX it spring points. to percentage benefited the despite off we the On start. by

on more last what the shared quarter there call, As entered and as upside certainly our we was inflation on thought to is pressure we earnings we the we saw. that

labor edible costs the Shifting see as variables We our higher increasing product commodity inputs well impacting C.U.E. and wage in categories. experienced in are that transport and consumable, vendor impressive continue rates underlying our to costs like and We as the partners. usable to our categories demand

these need-based trips stores. and As are demand-driven, our products and a into reminder, drive they’re what

growth times sales our overall sales C.U.E. almost growth was X Our rate.

in was spring a Our Kind solid our performance season January, out winter categories much month double-digit our colder category our never trends during stronger. colder of weather season growth mixed categories represented but XXth consecutive March. this again in growth, rounding have the as due C.U.E. double-digit e-commerce. we average and temperatures the or better customer below business, to quarter Shifting in of E-commerce been performance performed e-commerce. seasonal saw had of to

Of our expanding more in XX% sales. app represents digital strides our note, our great making digital of than mobile now presence. are We

crossed customers our X this experience. milestone And ONETractor to a the million and of offer Supply app. is we major downloads ability in a quarter, shopping Tractor seamless This our strategy more our

but The a Our recently an overwhelming a members increase last longer Neighbor’s been celebrated a Club ago, loyalty we of It quarter, success the one-year relaunch program. has it program has migrate their as to the encouraged customers much XX.X of anniversary million points-based XX% year measurably Neighbor’s quarter. relaunch upwards. Club spending to from year’s the reached like of an in record first seems than

Our Neighbor’s overall retention performance, and faster Club overall and our than growth rate are we’re comping company high-value our at in seeing customers. a strong members

are We shared term. and Last our quarter, long business structural setting and term self-reliance. you confident including from increased revitalization, we short in benefiting, world several with ownership, in we’re home trends the rise which pet

trends. well to leader, market to benefit these the are from structural As positioned we continue

we Additionally, continue to seeing our enabling Here Out initiatives, from to Life momentum share. strategic increasing are us gain

said, uncertainty environment. in have there that has acknowledge significant the business and As growth, many for we never is believe forward, macro look our vectors we stronger. we That been we

to that a have the at with the look practices of ahead way business to keeping We pandemic, on year best believe our of longstanding the lot is the still in us. to this we continue half. prior And

reiterating and XXXX. year’s we strong performance the are fiscal On the year last to heels start guidance a of year, our for record

address We acquisition. continue significant opportunities to I’ll for see the growth Orscheln us. of briefly ahead

We can at FTC continue the have coming towards positive hope collaboratively we work limited the a this we the about to and resolution an comments months. time. transaction are in make the with to Accordingly, update in

the of call to Kurt of year. the Now, rest for over to our of details I’ll outlook the first the the some quarter and turn discuss

Kurt Barton

fiscal Hal, of a our came strong sales our in has everyone The XXXX stack, and performance with were hello comparable two-year ahead to you, on call. expectations. On the XX.X%. Tractor Thank that started store Supply team

trends in at we weather our January spring with an is the first weather were across break the March conditions were early benefited last strongest quarter mind, with of cold country. albeit February We from in many comping the early across of the ideal keep rate the cadence to markets. in late of quarter, most Looking not the in quarter, Please spring quarter. months the the while and at of year positive, earlier

the to quarter, This contributed across ongoing XX team pressures points about store price comparable continues supply navigate cost inflation the our the as to retail chain. sales

transactions in we benefits prior positive were experiencing of As in cycled we be we the as saw compare the cycled last transactions transactions you illustrate, clearly stimulus the we where pandemic anticipated the largest of the with To would on the quarter, the gain QX XX%. last year. toughest of transaction quarter weeks beginning two we comp of since of on the last year shared we until this

As robust on performance were expected, the season. we spring the chain. we of XX.X% year, cycling, starts big the stack, of exceeded the early the big the ticket And reported, ticket outperformed performance our declined selling comps as given comp average and significantly driven we a two-year comps. ticket by Last growth stimulus big chain

heating C.U.E. categories feed We strength with continue poultry, dog to performance dry fuel. such food, as strong and see in

we Overall, company the XX% in instance, pet performance. top Petsense was dry performance. food our over our very above For a line line comp. dog average, which pleased with with achieved performed were

which margin, gross expectations. to now Turning our outperformed

decrease gross our gross margin basis and margin a product quarter, points product cost by sales. to first costs; significant extent, primarily declined XX.X% to The transportation XX in the factors: attributable three higher For mix. lesser to inflation; is of

step-up to costs. grains year-over-year oil. quarter in while a also as substantially We such well inflation as during have freight and seeing import commodities the continue and fuel as broad-based key experience Domestic costs increased

These Neighbor’s Here amortization. We in the depreciation $X.XX of from as quarter, $XXX a promotions normalization SG&A through Last EPS was the and first a committed to points. did of of amortization product was in incentive also dividend team mind, on have quarter cash margin. and of in our keep increased was more in through strategic of and a improvement investments job provided a were were other of The our basis benefited income in in other and sales. was and to store quarterly Net year, items sales related offset growing leverage, XXXX. first increase includes by the comp cycling in our of Out for improvement costs combination management put quarter continuing miles, XX expect incremental Life depreciation a $X.XX XXXX. an growth capturing and chain remain This Club. to shareholders moderation last throughout the gross returning pressure remarkable investments and attributable profit we to percent $X.XX. to we categories, share response the efficient comparable include and trends million, some these XX.X% to cost The of price growth. Please dividend efficiencies the compensation, initiatives. We into C.U.E. $X.XX COVID-XX leaning by occupancy partially increases our margin leverage store given from reduce cost the our rate freight strong to wages primarily value including robust these from net through to SG&A, in Examples compared lower costs XX% in in continue results sales which and costs repurchases. and step-up managing which our This diluted of many share gross XXXX. actions supply XX.X%, driving a limit did to

through we combination the million dividends. During of the returned quarter, share to repurchases $XXX and shareholders cash

remains long term. quarter, ability store. the representing inventory Turning This in first which now balance along provides in of primarily increase XX% is Merchandise support increase to the to billion inventories strong us with our per average our an the at to end invest of growing inflation, sheet, for inventory $X.X about the demand. in our to the business investment attributable and were

Moving now XXXX, unchanged. for which is to guidance our

with of earlier, mentioned billion growth in comparable the of $XX.X the year. guidance our As reconfirming net sales to This X.X%. Hal store sales to billion includes X% range for we $XX.X are

sales. forecast For we the XX.X% margin of of year, operating XX.X% to an

should expect first We the $X.XX. beat a to top We $X.XX quarter and we our of range line. to for inflation diluted benefit that in that own our continue ongoing EPS expectations acknowledge

year, With the our of dynamic backdrop, to of end guidance believe outlook first as to top year the quarter year. environment recognize and the of quarter ahead Keep great mind, macro pressure flowing our out our smallest QX the towards start may expectations. We put the it’s it’s for that ranges. through prudent in the our we a maintain is performance

a and guidance not historically convention is the those new we for provided pandemic. who’ve time, prior in us followed line how For to some is to of with you guidance this

high that level anticipate growth be by prior We are benefiting we’ve may transactions. average seeing We consumers business, incremental consolidation the continue expectations, much and our look watching the the but way year. seeing With quarter, a bit pressure. we to experienced ticket as our than in different inflation to by Historically, breakdown trip business pressures transactions with best halves we’re is at inflation believe closely during comparable of given the our average not the the strong of times. of inflationary by ticket

As offsetting leverage. pressure an inflation higher SG&A persist, puts benefit margin, to pressures gross provides it on yet

maintaining we’re our our operating margin. As expectations on such,

Farm is high the longtime level. guidance. the with our customers. In our is pleased not of a to for included we very team to our the very in of newer investing and are Orscheln acquisition quarter prospective and summary, the XXXX. our reminder, We The As loyalty first executing committed a in business remain outlook in Home retain -- at performance and

are shareholder everyday commitment our the call long that, returns to to prices improve back low supply commerce, our service, all strengthen to goals chain support of maintain and digital over term. strong drive I’ll and customer Hal. the for in grow Our turn With our our

Hal Lawton

over we growth have we time. on Thanks, shared robust significant Life Earnings Here details drivers believe strategy. idiosyncratic Out Kurt. Last Enhanced for We a quarter our at Event, our

gaining is well. Our traction team executing the is strategy and

of I’m of For Club, season. the provide customer, summer including on and Neighbor’s prepared our the to merchandising spring initiatives update my and highlights some going our remainder an remarks, for provide our

Our great customer in and Club committed trends our program. shape, capturing digital shopping are customer wallet service, numerous seamless through Neighbor’s our share our experience to properties, legendary we’re loyalty and

nearly engaged our on to that base be XXXX shopped that in the customer discussed goal we and customers QX remarkably In call, brands. by growth with customers to expand base. sets. seeing of to healthy we what share share And base, was with today customer number you categories new generational to exactly opportunities and our nurture with we’re capitalize expand our our customer on in years were customer highly our retain the ago, Our seizing capital seeing earnings continues that’s core pleased of of both millions the and wallet I’m and two our

we larger us customers are we the more stable. theme and coming Our new have levels shopped XXXX, that now pre-COVID customer spending into driving the of active the new frequency money. customers new skew continue rates run last acquisition new strong to On customers, active and to couple retained that and is at of pandemic, years. since a see customer the millions with base absolute continue much And our customers majority on younger. of are as our our very Continuing

start millennial driven the ongoing homeownership net millennial seeing growth areas, shoppers as Since millennials. We’re the out We coming there’s the future. the in the the believe in a pandemic, into suburban growth Supply areas. in the urban by growth Tractor brand cohort, been and the largely millennial in rural robust migration the the vibrancy growth our of of with supports most customer and is relevance well of

contributor sales strong our our Neighbor’s Club. growth to has positive Another been

also spending highest member, grew active trends indication Transactions, from and customers. rapidly earlier, $X,XXX last platform our program mentioned reached our to us. in of Infinity $X,XXX sales reached spending April is customer Notably, the revitalization, the points-based all tailwinds over total of tiered revamp customer pet by adopted home we per such over in I to I Neighbor’s rural we program highest of an an annually, level growth As the quarter. we from earlier, program significant has continue been benefit the self-reliance. ownership, our annually. loyalty These and level Neighbor’s mentioned a Club year Club of for setting and customers as spend structural that significantly are ever

confidence we overall Our continue the stronger the our outlook of of than year. and contributes customer to trends. we’re to our brand our in base these ever, context investing for in momentum is health offence ensure play to The

spring. Let’s shift to

serve change our take Our stores of customers. to advantage and the e-commerce to are seasonal well-positioned

we have over customer-ready for of garden centers spring. As XXX today,

stores. who’s and and to at our exciting as year, is our time Boy This market-leading new the year. this millennial with the home that of test an store Bad allowed or Toro, our customers always is of customer equipment. our offering transformations of customer category, expanded Chick look very a product share adopting response over having garden we’ve expanded outdoor of our center cooperated, in spring XX% garden to about lawn battery-powered offerings forecast the our the in Tractor each to To teams Out in end by incremental the And opportunity and We lots are in power are This importantly, to from stores and assortment side setting of And our have the tools, hosted the year. Here of assortment riding a we event continue an our battery-operated offering our and excited Supply that push various Where Try assortment. layout. Pro example breed birds Supply trimmers, which platform zero-turn category of Buy snow more help leaf retailer our capture category, a to has Tractor we our lifestyle. throwers Greenworks blowers, and Cadet. well novice and includes Greenworks Greenworks past exclusive great XX-volt market-leading stores drive store knowledge in widened expanded of began zero-turn mowers, the customers’ a our from feed products spring. change of sell headquarters residential zero-turn the the we’ve stores addition of our and Pro You expert. in professional-grade We weeks. care whether customers the more. Saturday, battery-operated them with Before coop, including Cub position rolled as online the earlier the Notably, this our our XX than an a seasons something millions they past XX-volt the strengthens Days chainsaws, options are wallet models year, out as for to and few mower forward we our

Dremel lineup lineup tool just our customers. week, Last power in selling, Bosch to leading that announced our of to for quality top relative a tools highest time the we spring. addition have and of We are

As and several Project expansion calls, mentioned an our of tool of a previous assortment key truck, is on component Fusion hardware. in

now PORTER-CABLE Bosch DeWalt, and exclusively, Makita, and Dremel. lineup tools Our include

different by We nearly are track XX% of much customers in on year-end. have for this macroeconomic in foundation an go for it’s a types resilient be opportunities To significant dynamic our of model living Supply. appreciation to Tractor numerous to we’re for the proven our and team And progress the market laying implemented has exciting future. like time values Supply the Project an business more to thanks their that of environment us, off category. every day. wrap And at a With continues dedication we’d aside, to up, cycles. stores destination Tractor open questions. been has of while also business as the through thrive for growth now incredible ahead share Fusion mission over team to making our up Tractor for and Supply the now, and to My call the

Operator

Please [Operator ahead. is Instructions] question from go Scot Scot, first Our Truist. Ciccarelli from

Scot Ciccarelli

Good Ciccarelli. morning, guys. Scot

So, And is, demand pricing what I with to guess, kind impact in later of as comp, go? my as in seeing? the inflation think the Thanks. kind year impact from related we from be structure of, we about you the get we question that, are cycling we’re should on line guys to XX% any, how impacts the top the because going larger obviously, if

Hal Lawton

joining for I’d the morning. Hey start call. thanks Scot. I just Good appreciate highest question. healthy. level. at very the Consumer’s out And our

had QX some our last from the it what we in stimulus from and ticket -- in talked follow-up on we very in last we there, where with early of and the few expected big notably As ticket, about dominantly that. we’re when at enhanced part part and nuances lapping QX. much event, year, in saw what exceeded a of earnings QX, Kurt Where line in the our of pressure big expectations we we we kind mentioned, foreshadowed but was some business

customer. in would also always We’ve out an ways start decades elasticity I’d it’s indication As X times the no above but but comp had the Kurt we’ve over point to comes. to that, the and little dog C.U.E. dry And comped prepared food -- a play on it many really our seen couple in mentioned in categories and overall spring, business of spring, it’s expect, I spring a been slow our as of different XX% remarks, the rate, you mentioned last in bit to otherwise, comps. seeing

of and lot right remodel to stores And that was demand-driven dog dry our back, our March now. the dollar year, reaction of world like part a the revitalization kind month It’s most ever in a tailwinds our not and step I the with to product a our I fact, categories then by have track food. In serve got kind XX% we highest also we’ve record addition lifestyle. economic Here in kind economic and of of One additional volume really need-based -- resiliency pet for just If the We just for two and things end us seen mentioned really elements. garden in a much of adoption now. to cycles. the inflation model, consistency strategy. of track Fusion. tailwinds, the factors with or XX% that got consistency are and of nearly Out going earlier, across other demand-driven macro different we’ve And types -- consumer, any And Life of it XXX business of of record continued relates as the all centers,

the to comments of of his in question, exceed your impact prepared around As point in inflation, second as on we far point I’d your remarks expectations our to did QX. Kurt’s kind

able rest inflation guidance the very and we historic macro effectively. of given then, continue up for for see And also half thought prudent do come sticking I Just continue and we’d beat first it to we be that. given -- think to our and having And to persistent. just up the year, roll But -- nice having were quarter, year. the in our if performance you through navigate through, the it reiterate the end certainly, a we to end continue exceed to We’d the to it to the of high take do we if end it of was environment, guidance. towards to you a would continues the our convention the year. be

Operator

Next is ahead. Morgan question please Simeon, go from of Simeon Stanley. Gutman

Simeon Gutman

I’ll two questions ask in the the of interest time. now

first The We used of the versus business’s ago. this a needs to talk mix while about is wants.

you slows? the we if the think discretionary So, second then, more consumer is do percentage the And how question a should about of that’s -- the how tactical. business little

If margins you look the the little they’re the comp. looks the at a earnings first rest margins complexion rest of of but year, down point for incremental like were for in the the quarter, like higher in given per it the year look the

guess, a Is So, up what’s, I you. bridge? less et cost, Is the investment? there there Thank mapping cetera?

Kurt Barton

Yes. generally Simeon, year. more both question and really around -- predominantly, I your you the the questions. versus discretionary then the business, a is of hit understood of hey, the do a of this margin reconcile needs-based question, operating needs first you cost, and how how do If rest which throughout Kurt. those the is I’ll we’re manage

heard manage back of we attribute of end gross to us to we year just outlook how needs-based, as In to areas to business is saw business, regards of versus it. expected QX. the some of and in pressure consistently a strong lifts the really have year last needs-based the and some our persists more be there the the saw less past, we from margins, with as expected we some as a we’d in stimulus, mentioned, of for level piece -- of margin is you’ve inflation that and some percentage, the business. our fairly we on discretionary expect like roughly our XX% trade-off Hal of those continues the as been pieces our discretionary Our business low And in demand-driven And discretionary. discretionary, while those

be We’re continue inflation; quarter take we going chain pressure from both gross puts as as the in three little costs; But, to SG&A. considering share, could opportunity gross of different we puts see as those C.U.E. margin. and of primary And mix. and margin the a inflation market categories: to strength product through bit each levers a to manage of pressure see we even bit pressure from this, really on the supply take

SG&A. the opportunity do in to the as also where in starting of the at inflation the year, tick year, the We has we’re really an compares, see leverage and more where year-over-year not see back up. us And impact for to first half much inflation help half of that stronger of

You QX, inflation, could but did opportunity stronger view as And on going we leverage that’s this SG&A. how in have to we’re business. you see to

we’ve target to manage XX.X% be confidence it to the going the the last the to gross but higher quarters, margin. able we and for we on the able gives couple see margin could manage different what year differ land and that’s by SG&A, us inflation. XX.X% where to this scenario of operating to do of number a through to there’s as years a We’re and scenarios, have of got levers And be the

Operator

is may from you Sachs. Our next Goldman Kate McShane from proceed. question Kate,

Kate McShane

the for you could elements could again particularly upside where how about of change the around in being guide. the was the you and just potentially conservative? Thank the we downside there you of to should wondering do composition think detail Where be think I be guide. risk

Kurt Barton

Hey. me In let give is going Kate. on a morning. you Kurt. perspectives look to forward. regards Good Yes, This the we at see your really guide, couple and question the how how business of it we

said. Hal reiterate First, I’ve I’ll just and what

of stack QX in there’s customers, toward strength two-year from of the out, any great the quarters. the hitting strong strength QX on off to new the stack four basis, on of in a performance coming Club, a the to start We’re a And our all transaction Neighbor’s point metrics. just two-year year where highest

mentioned the core the last as of multiple I said, the business earlier, the consistent in scenarios. and we’re healthy. managing right just two is years, That So, business and it in strong is even

to under scenario, expectations, and your that comps the pressure if in there to see SG&A. certainly on the initial one begin there’s that point We’ve in our of We seen inflation. patterns with question, negative change It necessarily And us in not spending us we transactions. the various benefit So, inflation, But, the inflation some ticket for of SG&A. even drives puts leverage with that and outside could help scenarios. margins, inflation. your trip that as are with it the leverage impact customers consolidation. We’ve that’s their can

going feel expectations strength the can the see comfortable in that that in very business year. manage playing next confident scenarios into our out, guidance right various we three so, number the we quarters of and the still our the now we meet of that, the and that And of demand very the as and we rest

Operator

of Michael next D.A. from Baker question Davidson. is Our

Michael Baker

kind term One and question short term. and a then of follow-up long

do short the a the some to expect --just presumably. weather On par March, being you’ve sales lost to -- so we in sub term, back

housing and How So, seven in probably But, should business, expect term up. row, rate sales us been how does assume. slow, for question. seen of impact how think longer gain remind do a going business? months six prices or down you And is you to terms your the the then, have I term that drop, to housing to second -- although about you been longer your in home existing been have Thanks. that the think how in weather? about we’ve has we April -- quarter, back can

Hal Lawton

on of starts to take and I’m direct Hey, it’s housing to as also home a and setting is spring. much That have of even the Yes. people their and from as benefiting the talk existing we homes in have home trends we we’ve into going of well been the housing, about one had correlation as investing sales, the out a shift notion segments little new -- part said, ex-urban their home rural and On first first in Michael, a then like sub-urban question other of of have urban areas revitalization second and your rural. kind Hal. don’t bit and land And and Seth of retail.

many sales think I have data are existing homes, there quarters see Most of their last bit were depreciation, you those trends Even many more the land versus a seen for the to rural, of going urban. of at out suggest United home at while from strong of customers to I continue and all outside amount There’s and some home look And days, numbers up from very that think come. come that benefiting think had cities, of years of to to sets a I our which new absolute if benefit numbers, the year-over-year effect. own that particularly still and and continuing. if sales, the in the we’ll and strong been land, absolute years you which and going own that. home were few the to has their still housing that. they’ve outsized -- States, see wealth very reductions, you’re you’re gains short They’re stock continue look then

over it I’m is had are little our Inventory very Kurt a we’ve is a has going So, great to our turn footsteps. home prime, of merchandising, as C.U.E. spring mentioned, spot, that like spring in but macroeconomic excited a about trend to strong and that more spring, to plans. tailwinds about certainly detail. stetting And revitalization rural trend very still some us. talk and feel slow for to plans start, spring -- bit in Seth On we driving marketing been our are

Seth Estep

Thanks, seen off areas as most southern to the obviously, game bit and the question. Yes. come spring. delay Hal the break weeks, weather are Hey, little with a seeing start mentioned, to plan very first here to Hey. the But of as of our encouraged couple last of foremost, the we Hal. Mike, Thanks, life. for starts we’ve

week say, Texas was know team be gardening, just has historically would our I number more into would been we centers. goods not both I and one category. customers last and and which our live could us deeper foremost, you, it about the excited I And garden members really and going in several tell First visited

just here. So, we about goods, QX. the of in end little we what that’s mind, a as we’re about zero-turn and positive is very stores We break. big right? and seeing would where in those not But of lineup plus for results, spoke best-in-class also have tell good at were live believe out top spring not I up first ticket being are bit of mind we that you top it’s seeing weather becoming we there. garden But We more XXX the set enter and for center particularly of them

entire and zero-turn the brands across demand strong lineup, very in seeing We’re both price point.

able be excited then respond to of we’re the nature, couple merchandising. to category drive continue that home really, and we’re the obviously or about attack year. demand real seeing also dive off not that new we our start, in this Pro where can our we A consumer spoken years that breeds, just we know garden -- of Supply, and consumer these and about at Chick quick exclusive things That’s business. and haven’t four into really through responding but think that about Greenworks It’s we and to past businesses just introducing new whether some that Tractor that share. that partnership things setting. great go take And that a to we we’ve We’re new related with have walls. spring newness and lawn a C.U.E. about other Days strong been is across it’s through coops to our market

So, spring us we to plan and and of here have excited in front what coming life. about the

Michael Baker

for detailed appreciate I Thanks it. the response.

Operator

is Zaccone. Our Steven next with question

Steven Zaccone

sounds how Hal, your macro see was sense but backdrop. input your like for guess, curious on I you broader just position, the healthy on you’re I curious in are that of do how to investors. the It consumers environment comfortable a consumer if And a the we the kind in performs I that do year? think shaping business the It’s up get in guess balance you with scenario over environment? recession, of potentially where a topical

Hal Lawton

increases the think environment, inflation, CPI reading And If talk inflation. for headlines that say handful month We this very think we step macroeconomic but months. of start that year, it joining all last with we’re persistent I had next the for of thanks we’re the inflation. I’ll about peak what day. the point It’s just the of is we’re consistent in at the in tough in every and seeing seeing not through if back call. Steven, X.X way morning, month only strong persistent and I is seen with about to inflation, what a the year. we’re our Good we’ve we X.X% will see, March,

it in for hearing calls wage there’s last variety growth and other today economy, far, reasons And mean, that kind had week, across has consumer I their the think a ability over that. country. shown but real many relates also earnings to inflation. so I to in strength that the you’re have the call, hearing it out earnings our come strong the As you’ve of of the and navigate

got into in savings $X tap of trillion that savings plus are You’ve you can people pent-up starting now, and that to rate. see

You dig a see tapping think But if their using do their with down to we’re into people moving credit then is and seeing yet little card I you that up. into up. credit default savings pay those cards bit what of rates usage not

straight we consumer’s of the stepping think talk is transactions. at navigating very net back, look an positive pet as years sales this then think, well. premature. I next years stability benefiting XX ‘XX, And resilient, growth a with business, XX Life doubled This which consistent it We’ve XX, strategy, navigate whether our straight COVID, all incredibly I combine tailwinds fee, in mentioned years XX the able I is that number recession our the any last whether through. of our doubled just point really you comp comp stable of company. even this the down just in macroeconomic business. recession couple at we’ve is recession And had of food. of us just that ‘XX, animal I are growth, of and the had that XX this been to if XXXX, ago. And a a our cycles, we’ve of we those And in down accentuate sales XX was was of leg ‘XX, it Here think that of has positive business All Out years types for sorts economic earlier, of in the indicative ago, years been business And there’s has growth. of ago, had scenarios,

doubling more at never Tractor Supply. down we’re Supply. combined We’ve had shopping goods a customers remodel. with We’ve business had in stronger digital Fusion live Now, our never Tractor

excited long-term. we And now. right strong incredibly from business is are much about very business short-term the perspective Our and a

Operator

is Nagel. question with next Brian Our

Brian Nagel

Hi. into I Good morning. questions have two that Nice I’ll one. quarter. merge short

expectations, you first question, question. a guess a above is this more your the about But of I I the talk The of some just then also pressures. logistics, kind not but of tracking mean, quarter weather

the -- plan, a inflation And of consumer benefit you benefit more plans. that you some of you Kind -- work of internal or you’re to -- managing where -- weather, way tier shop were of from sort you question, prices Are what to is, or say, prices? my maybe health your more see lot look of consumers flipping into how your the that is over, markets the starting a your consumer your upside your more then the say, quarter second about for at there its in as of challenging higher question stores? of commodity to oil higher your so internal talked in my guess, planning and in were that. potentially drove, the I So, this we

Kurt Barton

is Brian. Kurt. good This Yes, Hey, morning.

in to to So, puts the of on in oil regards the our is QX; -- et industry expectations cetera. market our geo some to two of and questions, as then, one some other one regards the the and in areas comparison takes such

the last take The year, out. slightly early weather that points me January month QX that we to for benefited the an and flattish is of then let from we those. QX, year offset. is, year a March from, with quarter saw had cold had weather in we start that basis This biggest to and weather in XXX we compared good last we the we pointed but perspective to So, year, start pointed, early the In unfavorable. point both had there spring, in last such quarter, modestly the we to

weather well C.U.E. a strengths was ability share. to in came to our perspective. from the So, how capture neutralish performed of and market some Really continue

that it’s economies, asked all the oil the significantly early micro beyond about on helps So, We now, see start that that. be necessarily our say two summary, weather could I -- the lot economy. expectations. too that, still tell. much that scenario of In not wasn’t key would we beyond In to a some early various to a farm regards I’d to industry, plan that hope are ones spring. right there as

not seeing of some in that. illustrate are why any indicate And those shift anything. We meaningful markets on that I’ll

The the of rise economy some patient, bit Farmers the costs industries, view and to but input necessarily of lagging industry a is don’t farm of are oil in some a get the the prices. we Right takes negative now. oil faced in ground. a out oil growth the farmers increase higher favorable the with right those in in really product now, some more as of tailwind commodities time potential business. First, or yes,

it’s to are those of a lifts prepared matter So, all markets. watch ready support something closely, and and we we’re I We’ll think markets specific when it healthy other because if industries to that. to Overall, watch. certainly but and see consistent very those with of begin

Brian Nagel

it. appreciate It’s very helpful. I

Operator

is Short Karen from with question next Our Barclays.

Karen Short

questions. Two

was one XX% on more down But with first two- a less that, inflation. inflation only of what and And basis, for the embedded terms is your for year, is the then, traffic, your inflation three-year one, held. X% or updated on So within year? I guess, expectation the on actual in traffic

will abate, could three-year of inflation help so presumably, one-, just traffic for overall on So, the the a thinking you’re clarify about two- actually you basis? that how because traffic the should remainder and year,

Hal Lawton

providing the earlier our we for we’re at and potential in of quarter. I remains. much for the continue today, for year, an upside we but still and X% a very in run And persistent, the to that inflation was our the call earnings, say On enhanced comment And but around inflation upside anything, Kind for joining higher. of we X% mentioned that update an that’s kind it question. for I assumption year if potential that question saw do being saw my not number what through Thanks on the think or our there balance would that. to that X% will of around

shopped our point quarters. two- if how was March, were basis. had with in in job but it a us pleased new weather very we To and customers of rolling spring traffic of your quarter the years. of comp excellent from And XX in stimulus We’ve differences either in had, with tens about benefits previous above over expectations. we the line that the we year, very exceeded it and we than certainly, transactions maintaining month or and shopping On customers the have on were last never And on an Supply more particular, traffic, that Tractor done ran. millions our pleased the the you sequentially our think the we’ve stacks, with the differences, have of last the two three-year

Our active customer is strong. file incredibly

membership Our Neighbor’s The never participation, active program, never higher. Club members higher. been in have been participation Neighbor’s the has program Club

of our about our of kind business inflation kind within So, our environment. trajectory, customer demand-driven trajectory really our and need-based a in good customers we transaction navigating type those in feel customers

Karen Short

in not of think that’s a pressured light -- Difficulty] just I I [Technical you’re comment that in would Can or made I what traffic that’s would clarify, was context seeing. that continue light in to to It of inflation, Kurt only be pressured be want not the clarify? but just

Hal Lawton

Yes.

we margin bit see might around kind operating still inflation sales rate on to our with trips margin pleased saying, little the dollars behavior run notably of they core the bit I that scenario -- the quarter. consolidate higher more range line side, than context guided our of deliver we but out margin would we profile if more they rates, little see still look, play is pressure and our and slightly fixed the could what be And SG&A in that same in do then, one we’re just that’s we’re the And our really, had on a on that because point very And of performance size excellent that, guidance. running more. basket margin still transactions. lower is higher what the operating a pressure thing might on less much operating and performance, And within articulate customer clarify, think, we margin to see if different runs trying there’s think what the -- year. gross sales exceeded if shopping rate all And and was a patterns, to scenarios Kurt first still the one some high, costs expectations that the play margin guidance. of And that be we’re I in drive of We continues balance there that could could EPS. very the -- metrics, so, out across variety for might those might mentioned, a traffic, we in inflation with our of as us in high. would

Operator

question next UBS. with Our of is Michael Lasser

Michael Lasser

big ticket There’s the some equipment, others a fitness of out connected from there heightened focus grills, given spending, indications mattresses. on around

to which this overall trends ticket what in the than that’s average, last drop-off of that like sounds weeks the big quarter, Your doing persisted suggestion better inclusive your are a and into two the weeks is of first few of quarter.

strength the Thanks. ticket that much in And for big growth? to Supply? driving inflation is how is Tractor what So, growth contributing

Hal Lawton

kind And are we we’re big fall-off And seasonal it ticket, attributable I’d results ticket for pleased seen were say And bit. also in like the we’re saw things inflation. in those grills, we’ve big in directly the categories riders expected. not where that in ticket would to in weather across in spring of up that dominantly, non-seasonal question, with inflation with -- as ticket Seth movement I we inflation, safes. sales then, stimulus, things categories, what There those those Michael. categories, our thanks morning. we gun the But just seeing to sales mentioned, board. relates businesses, much say, things to Good the like excellent like by line seeing very In unit are a items. seen probably we’ve on break three driven break, as and certainly big bigger

continue big be inclusive in confident business of very our of short ticket. we year. -- And term rest and feel overall, the term, about we’re the to So, long excited

Operator

next Securities. Guggenheim Forbes question from Our Steven is from

Steven Forbes

you’ve both recently. road been it start right? with learnings, morning. Good to in-market the As like Seth, Hal, on looks I your wanted

the some trends? outside what I is did maybe you own regions learnings? seasonal by us can your that among that different And So, visited, mean notice about really of the anything of associates. And take key behaviors? the saying you store What learnings are through from you they their

Hal Lawton

the And Ordus Supply’s Yes. question. just shape. mission sure we Hey Steven, a in culture. our great on And the John and I thanks values fantastic recently, think and a tenant making core been road have organization in for Tractor job hiring. and done of is lot all team field our a it’s our have

managing job in We’re an team members. kind continues done of to dedicated team team -- FAST attrition. now, nearly stores terms roll We’ve of more XX,XXX to FAST members our out excellent

new programs, John in rolling earnings our We’re last productivity call. out outlined as

our got shape. we are If they’re all we’ve and ready orderly. right and riders, spring, Grills And engagement, quarter. they’ve last in year. never you and of great now, clean and our across terms end -- is in store walk service done for been assembly towards better our -- on our had survey of all across for Product of ready second the stores got well-organized right then, They we shelves. got very stores -- now. engagement We’ve really the We’ve the in the

was at team store Our engagement all-time member high. an

as our I progress company. in at I we to be As to team us job And already the managing and into pride a second deliver And move going on we our make are mentioned service -- we even the that are customer to we And it’s doing glue we’re attrition ourselves -- excellent inside high think continuing really members the only now. of we’re think level. of our stores. an that earlier, an I on quarter big as benefit

Operator

of from Haskett. Grom Our Chuck Gordon next question is

Chuck Grom

to that see can front Kurt, sense posted that confidence the full can how open you arrive out XX to of that stores weren’t up the to to And the XQ? the for X.X% open provide on X% year given rest you given XQ? view, then, the just comp second the particularly to here stores, playing quarter, in levels for in on front, you any a in here talk you the you XX order at year able upside up your about here

Kurt Barton

the through continue performance, as the our Thanks expectation out and managing of performance we in I’ll and this or as questions, I through Hal exceeded them last roll for to year. you have the QX the have years, talked strong coming Yes. multiple two plays off how And as are just comp year. there. what for regards that reiterate two Certainly, the about of we we’ll say business scenarios. to we that

the good momentum at high You guidance the end quarter one could We’ve see sales into It’s our we the got of the have the year. year rest range. business. comp in as of

predict our as upward the you even we And opening how in we through, range. it’s out, indicated, early that in you so, of managing but saying levels to at to puts this start do tell flow -- as And the we our regards play stores. this inflation, that. recognize have is store we I’ll And and of of you high new how as the inflation we’ve new on end that. pressure And even are as business guidance this persists, to can could be then, we’re no towards on it view regards point, concerns best we openings, by that

confidence XX solid opening record XX, to of hit our a our have to track year. XX stores. this XX ability in We’ve stores got We

is solid. Our process

not of stores Our effort the the some to is of in pipeline construction the quarter. We exempt for supply a chain, challenges really right XX et strong labor, is complete fourth new of put stores and And from now. cetera. lot

in saw of those stores Those targets been of open for stores up and the out expect will out, -- is in typically way, hit QX QX. our strong And push have stores QX, pushed some year have pipeline real some We this smallest of And to quarter well. by stores. QX new a we as stores. our still those new scenarios as our that QX--

Mary Winn Pilkington

and question we Austin, then more take up of the hour, please. top in question, if maybe wrap the keep the at next after we’ll one call our

Operator

Of course.

final will Research. from Our be Northcoast question Cerankosky of Chuck

Chuck Cerankosky

morning, the thus And of C.U.E. shaping strong there second of at how Good quarter, total, percent in there that is a the up sales you spending? first stimulus mix on something Nice quarter? as far is look into everyone. going level else is quarter. besides -- When

Hal Lawton

On share. thank Chuck, how for And Hey joining you growth attribute taking call the Yes. are you? our I today. C.U.E., to would strong

our a we’re relative in sales grew the XX%, grew points, market which by earnings talked significant in stack, meant total share XX% animal to event, we leader two-year that our market about -- feed. at is the we -- As outgrew market gain. enhanced on And XX the

and of those so the of Life the one our to gaining and for that’s just one Out strategy, driving we’re significant we’re setup pet that the market for reasons We’re customer footsteps the year. excited into -- we leaders share that’s the our us C.U.E. stores our has really about and balance attributable the of categories. Here and in It’s are our in business of food model, both service,

Mary Winn Pilkington

earnings around at look to our I talking Marianne our completes today. second call forward and quarter July. This Both to you We call are today. in

feel free very you our today. out. reach But So, please joining thank call much to for

Operator

Thank for That your concludes you conference participation. the call.

You may lines. your disconnect now

Tractor Supply (TSCO) 21 Apr 222022 Q1 Earnings call transcript