TRACTOR SUPPLY CO /DE/ (TSCO) · Material Event (8-K) SEC Filing

EX-99.1 2 ex991-q22026earningsrelease.htm EX-99.1 PRESS RELEASE DATED JULY 23, 2026 Document TRACTOR SUPPLY COMPANY REPORTS SECOND QUARTER 2026 FINANCIAL RESULTS UPDATES FISCAL YEAR 2026 OUTLOOK Brentwood, Tenn., July 23, 2026 - Tractor Supply Company (NASDAQ TSCO), the largest rural lifestyle retailer in the United States (the Company ), today reported financial results for its second quarter ended June 27, 2026. l Net Sales Increased 2.3% to $4.54 Billion Comparable Store Sales Decreased 1.5% l Company Recorded Charges Related to a Restructuring of the Petsense Business and Costs Associated with the VIP Petcare Acquisition l Diluted Earnings per Share ( EPS ) of $0.69 and Adjusted Diluted EPS of $0.811 1 See Use and Reconciliation of Non-GAAP Financial Measures below The Tractor Supply business model demonstrated its strength and durability during the second quarter. Positive comparable store sales in April and June were more than offset by unusually adverse conditions in May, which drove second quarter results below our expectations. While we are not satisfied with our performance, we believe there are discrete headwinds impacting the majority of our end markets. Our core customer remains highly engaged, our needs-based businesses continue to perform well, and our competitive position remains strong. Tractor Supply has successfully navigated many economic cycles throughout our 88-year history, and we remain confident that the long-term demand drivers supporting our business remain intact. I want to thank our Team Members for their continued dedication to serving our customers every day, said Hal Lawton, President and Chief Executive Officer of Tractor Supply.Lawton continued, We are updating our fiscal 2026 outlook to reflect our year-to-date performance and expectations for the balance of the year. We are responding with urgency by strengthening our companion animal business, reinforcing our value position and improving productivity across the business. At the same time, we are sharpening our strategic focus, evaluating where we allocate capital and resources and making disciplined choices that we believe will strengthen Tractor Supply and create long-term shareholder value. The actions we are taking are designed to improve performance over the balance of the year and further position the Company for long-term success. Second Quarter 2026 ResultsNet sales increased 2.3% to $4.54 billion from $4.44 billion in the second quarter of 2025. The increase in net sales was driven by new store openings, partially offset by the decline in comparable store sales. Comparable store sales decreased 1.5%, as compared to an increase of 1.5% in the prior year s second quarter, reflecting comparable average transaction count decline of 1.7% and comparable average ticket increase of 0.2%. Comparable store sales were positive in April and June, with underperformance in May driving the decline for the quarter. May results were pressured by softness in seasonal categories, including big-ticket items, as well as lower spending in discretionary categories. While the Company's consumable, usable and edible categories remained resilient overall, companion animal continued to perform below the Company average, although trends improved through the quarter. Continued strength across the balance of the Company's consumable, usable and edible categories, along with growth in digital sales, partially offset these headwinds.Gross profit increased 2.6% to $1.68 billion from $1.64 billion in the prior year s second quarter. Gross margin rate was 37.1% compared to 36.9% in the prior year s second quarter. The second quarter of 2026 results include an inventory write-down of $5.9 million related to the planned closure of approximately 75 Petsense stores. On an adjusted basis, gross profit increased 3.0% to $1.69 billion, or 24 basis points to 37.2% as a percent of net sales for the quarter. This increase was primarily attributable to disciplined product cost management and tariff-related benefits that more than offset higher freight expense and incremental investments to strengthen the Company's price-value position.Selling, general and administrative ( SG A ) expenses, including depreciation, amortization and impairment, increased 14.4% to $1.22 billion from $1.06 billion in the prior year s second quarter. As a percent of net sales, SG A expenses increased to 26.8% from 23.9% in the second quarter of 2025. The second quarter of 2026 results include impairment and other charges for the Petsense business of $65.8 million due primarily to a restructuring of the business as well as acquisition costs of $9.5 million for the acquisition of VIP Petcare. On an adjusted basis, SG A expenses increased 7.3% to $1.14 billion, or 118 basis points to 25.1% as a percent of net sales for the quarter. The increase in adjusted SG A as a percent of net sales was primarily attributable to deleverage from lower comparable store sales, as well as higher medical claims and legal settlement expenses.Operating income decreased 19.2% to $467.1 million from $577.8 million in the second quarter of 2025. On an adjusted basis, operating income decreased 5.1% to $548.3 million.The effective income tax rate was 19.8% compared to 23.2% in the second quarter of 2025, primarily reflecting the timing of certain tax planning initiatives, as well as the one-time charges associated with the restructuring of the Petsense business and the acquisition costs associated with VIP Petcare.Net income decreased 16.1% to $360.7 million from $430.0 million in the second quarter of 2025. Diluted EPS decreased 14.9% to $0.69 compared to $0.81 in the second quarter of 2025. On an adjusted basis, net income was $423.5 million, or $0.81 per diluted share.The Company repurchased approximately 3.9 million shares of its common stock for $135.3 million and paid quarterly cash dividends totaling $125.6 million, returning a total of $260.9 million of capital to shareholders in the second quarter of 2026.The Company opened 28 new Tractor Supply stores and three new Petsense by Tractor Supply stores in the second quarter of 2026.Financial OutlookBased on year-to-date performance and the Company s outlook, Tractor Supply is updating its financial guidance for fiscal year 2026. Adjusted operating margin, adjusted net income and adjusted diluted EPS are non-GAAP financial measures that exclude the Petsense impairment and VIP Petcare acquisition costs. The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort. Updated Net Sales +2.5% to +3.5% Comparable Store Sales (1%) to flat Operating Margin Rate 8.0% to 8.3% Adjusted Operating Margin Rate 8.5% to 8.8% Net Income $930 million to $990 million Adjusted Net Income $990 million to $1.05 billion Earnings per Diluted Share $1.78 to $1.88 Adjusted Earnings per Diluted Share $1.90 to $2.00 Given the revised 2026 outlook, the Company is withdrawing the long-term financial framework introduced at its December 2024 Investor Day. Tractor Supply remains confident in its long-term market opportunity and expects to provide an updated long-term financial framework in conjunction with its fourth quarter 2026 earnings announcement.Conference Call InformationTractor Supply Company will hold a conference call today, Thursday, July 23, 2026 at 10 a.m. ET. The call will be webcast live at IR.TractorSupply.com. Please allow extra time prior to the call to visit the site and download the streaming media software required to access the webcast.A replay of the webcast will also be available at IR.TractorSupply.com shortly after the call concludes.About Tractor Supply CompanyFor more than 85 years, Tractor Supply Company (NASDAQ TSCO) has been passionate about serving the needs of recreational farmers, ranchers, homeowners, gardeners, pet enthusiasts and all those who enjoy living Life Out Here. Tractor Supply is the largest rural lifestyle retailer in the U.S., ranking 290 on the Fortune 500. The Company s more than 54,000 Team Members are known for delivering legendary service and helping customers pursue their passions, whether that means being closer to the land, taking care of animals or living a hands-on, DIY lifestyle. In store and online, Tractor Supply provides what customers need anytime, anywhere, any way they choose at the low prices they deserve. As part of the Company s commitment to caring for animals of all kinds, Tractor Supply is proud to include Petsense by Tractor Supply, a pet specialty retailer, Allivet, a leading online pet and animal pharmacy, and VIP Petcare, the largest provider of mobile veterinary care in the United States, in its family of brands. Together, Tractor Supply is able to provide comprehensive solutions for pet care, livestock wellness and rural living, ensuring customers and their animals thrive. From its stores to the customer s doorstep, Tractor Supply is here to serve and support Life Out Here.As of June 27, 2026, the Company operated 2,463 Tractor Supply stores in 49 states and 209 Petsense by Tractor Supply stores in 23 states. For more information, visit www.tractorsupply.com and www.Petsense.com. ###Forward-Looking StatementsThis press release contains certain forward-looking statements, including statements regarding market share gains, value creation, customer trends, new stores and distribution centers, store closures, property development plans, return of capital, financial guidance for fiscal 2026, including net sales, comparable store sales, operating margin rates, adjusted operating margin rates, net income, adjusted net income, earnings per diluted share, adjusted earnings per diluted share, and share repurchases, and expectations regarding a future long-term financial framework. All forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, are subject to the finalization of the Company s quarterly financial and accounting procedures, and may be affected by certain risks and uncertainties, any one, or a combination, of which could materially affect the results of the Company s operations. Forward-looking statements are usually identified by or are associated with such words as will, intend, would, expect, continue, believe, anticipate, optimistic, forecasted and similar terminology. Actual results could vary materially from the expectations reflected in these statements. As with any business, all phases of our operations are subject to factors outside of our control. These factors include, without limitation, the impact of the recent and potential future tariff announcements and the corresponding macroeconomic pressures and those factors discussed in the Risk Factors section of the Company s Annual Reports on Form 10-K and other filings with the Securities and Exchange Commission. 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 most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q, 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, except as required by law.(Financial tables to follow)Consolidated Statements of Income(Unaudited)(in thousands, except per share and percentage data) For the Fiscal Three For the Fiscal Six Months Ended Months Ended June 27,2026 June 28,2025 June 27,2026 June 28,2025 % of % of % of % of Net Net Net Net Sales Sales Sales Sales Net sales $ 4,541,314 100.00% $ 4,439,729 100.00% $ 8,133,360 100.00% $ 7,906,682 100.00% Cost of merchandise sold 2,858,705 62.95 2,799,755 63.06 5,149,566 63.31 5,011,285 63.38 Gross profit 1,682,609 37.05 1,639,974 36.94 2,983,794 36.69 2,895,397 36.62 Selling, general and administrative expenses 1,021,899 22.50 940,063 21.17 1,963,052 24.14 1,826,269 23.10 Depreciation and amortization 130,848 2.88 122,099 2.75 257,449 3.17 242,179 3.06 Impairment expense 62,747 1.38 62,747 0.77 Operating income 467,115 10.29 577,812 13.01 700,546 8.61 826,949 10.46 Interest expense, net 17,103 0.38 17,983 0.41 36,211 0.45 37,624 0.48 Income before income taxes 450,012 9.91 559,829 12.61 664,335 8.17 789,325 9.98 Income tax expense 89,297 1.97 129,786 2.92 139,096 1.71 179,913 2.28 Net income $ 360,715 7.94% $ 430,043 9.69% $ 525,239 6.46% $ 609,412 7.71% Net income per share - basic $ 0.69 $ 0.81 $ 1.00 $ 1.15 Net income per share - diluted $ 0.69 $ 0.81 $ 1.00 $ 1.14 Weighted average shares outstanding Basic 523,729 530,331 525,068 531,030 Diluted 524,615 532,205 526,416 533,152 Dividends declared per common share outstanding $ 0.24 $ 0.23 $ 0.48 $ 0.46 Note Percent of net sales amounts may not sum to totals due to rounding.Consolidated Statements of Comprehensive Income(Unaudited)(in thousands) For the Fiscal Three For the Fiscal Six Months Ended Months Ended June 27,2026 June 28,2025 June 27,2026 June 28,2025 Net income $ 360,715 $ 430,043 $ 525,239 $ 609,412 Other comprehensive loss Change in fair value of interest rate swaps, net of taxes (1,217) Total other comprehensive loss (1,217) Total comprehensive income $ 360,715 $ 430,043 $ 525,239 $ 608,195 Consolidated Balance Sheets(Unaudited)(in thousands) June 27,2026 June 28,2025 ASSETS Current assets Cash and cash equivalents $ 231,588 $ 225,810 Inventories 3,518,451 3,090,306 Prepaid expenses and other current assets 298,482 227,649 Income taxes receivable 205,995 Total current assets 4,254,516 3,543,765 Property and equipment, net 3,223,898 2,884,660 Operating lease right-of-use assets 4,110,840 3,655,729 Goodwill and other intangible assets 506,249 399,622 Other assets 66,318 75,019 Total assets $ 12,161,821 $ 10,558,795 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities Accounts payable $ 1,760,347 $ 1,519,094 Accrued employee compensation 74,935 72,305 Other accrued expenses 878,948 614,221 Current portion of finance lease liabilities 10,315 3,437 Current portion of operating lease liabilities 463,556 410,249 Income taxes payable 1,648 143,346 Total current liabilities 3,189,749 2,762,652 Long-term debt 2,153,826 1,673,472 Finance lease liabilities, less current portion 42,933 26,318 Operating lease liabilities, less current portion 3,874,348 3,443,879 Deferred income taxes 100,109 19,841 Other long-term liabilities 169,291 142,324 Total liabilities 9,530,256 8,068,486 Stockholders equity Common stock 7,136 7,124 Additional paid-in capital 1,473,959 1,399,333 Treasury stock (6,641,872) (6,191,887) Retained earnings 7,792,342 7,275,739 Total stockholders equity 2,631,565 2,490,309 Total liabilities and stockholders equity $ 12,161,821 $ 10,558,795 Consolidated Statements of Cash Flows(Unaudited) (in thousands) For the Fiscal Six Months Ended June 27,2026 June 28,2025 Cash flows from operating activities Net income $ 525,239 $ 609,412 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 257,449 242,179 Impairment expense 62,747 Gain on disposition of property and equipment (41,465) (33,421) Share-based compensation expense 33,162 25,976 Deferred income taxes (3,010) (24,054) Change in assets and liabilities Inventories (429,655) (231,907) Prepaid expenses and other current assets (91,619) (26,400) Accounts payable 363,375 271,691 Accrued employee compensation (39,906) (28,848) Other accrued expenses 178,720 (15,892) Income taxes (177,303) 160,308 Other 15,402 53,531 Net cash provided by operating activities 653,136 1,002,575 Cash flows from investing activities Capital expenditures (435,713) (351,644) Proceeds from sale of property and equipment 69,938 42,906 Acquisition of VIP Petcare, net of cash acquired (129,838) Acquisition of Allivet, net of cash acquired (139,936) Net cash used in investing activities (495,613) (448,674) Cash flows from financing activities Borrowings under debt facilities 3,000,000 1,315,000 Repayments under debt facilities (2,610,000) (1,475,000) Debt issuance costs (2,506) Principal payments under finance lease liabilities (1,445) (2,056) Repurchase of shares to satisfy tax obligations (14,384) (14,482) Repurchase of common stock (253,607) (169,979) Net proceeds from issuance of common stock 13,920 11,315 Cash dividends paid to stockholders (252,022) (244,380) Net cash used in financing activities (120,044) (579,582) Net increase (decrease) in cash and cash equivalents 37,479 (25,681) Cash and cash equivalents at beginning of period 194,109 251,491 Cash and cash equivalents at end of period $ 231,588 $ 225,810 Selected Financial and Operating Information(Unaudited) For the Fiscal Three For the Fiscal Six Months Ended Months Ended June 27,2026 June 28,2025 June 27,2026 June 28,2025 Sales Information Comparable store sales increase (decrease) (1.5) % 1.5 % (0.6) % 0.5 % New store sales (% of total sales) 3.6 % 2.9 % 3.4 % 2.8 % Average transaction value $63.70 $63.68 $60.91 $60.51 Comparable store average transaction value increase (decrease) (a) 0.2 % 0.5 % 0.8 % (1.0) % Comparable store average transaction count increase (decrease) (1.7) % 1.0 % (1.4) % 1.5 % Total selling square footage (000 s) 41,877 39,755 41,877 39,755 Owned Brands and Exclusive Product Categories (% of total sales) (b) 29.0 % 27.6 % 30.2 % 29.5 % Imports (% of total sales) 10.7 % 10.9 % 10.7 % 11.1 % Store Count Information Tractor Supply Beginning of period 2,435 2,311 2,395 2,296 New stores opened 28 24 68 39 Stores closed End of period 2,463 2,335 2,463 2,335 Petsense by Tractor Supply Beginning of period 206 206 207 206 New stores opened 3 2 3 4 Stores closed (1) (1) (3) End of period 209 207 209 207 Consolidated end of period 2,672 2,542 2,672 2,542 Pre-opening costs (000 s) $3,490 $4,764 $7,774 $7,276 Balance Sheet Information Average inventory per store (000 s) (c) $1,231.0 $1,155.0 $1,231.0 $1,155.0 Inventory turns (annualized) 3.33 3.60 3.15 3.33 Share repurchase program Cost (000 s) (d) $136,832 $72,822 $255,643 $166,649 Average purchase price per share $34.92 $51.10 $40.86 $52.89 (a) Comparable store average transaction value changes include the impact of transaction value changes achieved on the current period change in transaction count.(b) Beginning in the fiscal year ended December 27, 2025, the metric of exclusive brands as a percentage of total sales, which historically included only Tractor Supply Owned Brands, was revised to include both Tractor Supply Owned Brands and Exclusive Product Categories as a percentage of total sales. Prior period amounts have been recast to conform to the current year presentation.(c) Assumes average inventory cost, excluding inventory in transit.(d) Effective January 1, 2023, the Company s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock.Note Comparable store metrics percentages may not sum to total due to rounding. For the Fiscal Three For the Fiscal Six Months Ended Months Ended June 27,2026 June 28,2025 June 27,2026 June 28,2025 Capital Expenditures (in millions) New stores, relocated stores and stores not yet opened $ 91.5 $ 85.3 $ 185.2 $ 144.8 Existing stores 71.1 58.4 123.7 101.4 Information technology 39.3 42.8 73.4 68.8 Distribution center capacity and improvements 30.7 23.6 52.7 31.6 Corporate and other 0.5 0.2 0.7 5.0 Total $ 233.1 $ 210.3 $ 435.7 $ 351.6 Use of Non-GAAP Financial MeasuresThe Company reports its financial results in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results. Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP. Therefore, the Company s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies. The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with U.S. GAAP. The Company believes this information is useful in providing period-to-period comparisons of the results of our continuing operations.Reconciliation of Non-GAAP Financial Measures(Unaudited)(in thousands, except per share and percentage data) For the Fiscal Three Months Ended June 27,2026 Impairment and Acquisition Costs (a) June 27,2026 (As Reported) (Adjustment) (As Adjusted) % of % of % of Net Net Net Sales Sales Sales Cost of merchandise sold $ 2,858,705 62.95% $ (5,926) (0.13)% $ 2,852,779 62.82% Gross profit $ 1,682,609 37.05% $ 5,926 0.13% $ 1,688,535 37.18% Selling, general and administrative expenses (including depreciation, amortization, and impairment expense) $ 1,215,494 26.77% $ (75,291) (1.66)% $ 1,140,203 25.11% Operating income $ 467,115 10.29% $ 81,217 1.79% $ 548,332 12.07% Income before income taxes $ 450,012 9.91% $ 81,217 1.79% $ 531,229 11.70% Income tax expense $ 89,297 1.97% $ 18,433 0.41% $ 107,730 2.37% Net income $ 360,715 7.94% $ 62,784 1.38% $ 423,499 9.33% Diluted net income per share $ 0.69 $ 0.12 $ 0.81 For the Fiscal Six Months Ended June 27,2026 Impairment and Acquisition Costs (a) June 27,2026 (As Reported) (Adjustment) (As Adjusted) % of % of % of Net Net Net Sales Sales Sales Cost of merchandise sold $ 5,149,566 63.31% $ (5,926) (0.07)% $ 5,143,640 63.24% Gross profit $ 2,983,794 36.69% $ 5,926 0.07% $ 2,989,720 36.76% Selling, general and administrative expenses (including depreciation, amortization, and impairment expense) $ 2,283,248 28.07% $ (75,291) (0.93)% $ 2,207,957 27.15% Operating income $ 700,546 8.61% $ 81,217 1.00% $ 781,763 9.61% Income before income taxes $ 664,335 8.17% $ 81,217 1.00% $ 745,552 9.17% Income tax expense $ 139,096 1.71% $ 18,433 0.23% $ 157,529 1.94% Net income $ 525,239 6.46% $ 62,784 0.77% $ 588,023 7.23% Diluted net income per share $ 1.00 $ 0.12 $ 1.12 (a) Impairment and Acquisition Costs totaling $75.3 million are comprised of $33.2 million in goodwill and intangible asset impairment charges, $32.6 million in other impairment and restructuring charges, and $9.5 million in acquisition costs.