Tractor Supply (TSCO) Q4 2024 Earnings Call Transcript

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Tractor Supply (TSCO -5.09%)
Q4 2024 Earnings Call
Jan 30, 2025, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to Tractor Supply Company’s conference call to discuss fourth-quarter and fiscal-year 2024 results. [Operator instructions] Please be advised that reproduction of this call, in whole or in part, is not permitted without written authorization of Tractor Supply Company. And as a reminder, this call is being recorded. The host for today’s call is Mary Winn Pilkington, senior vice president of investor and public relations for Tractor Supply Company.

Now, first up is a year-end video. [Commercial break] I would now like to pass the call to our host, Mary Winn Pilkington. Mary Winn, please go ahead.

Mary Winn Pilkington — Senior Vice President, Investor and Public Relations

Thank you, Alisa. Good morning, everyone. We appreciate your time and participation in today’s call. On the call today are Hal Lawton, our CEO; and Kurt Barton, our CFO.

Following our prepared remarks, we’ll open the floor for questions. Seth Estep, our chief merchandising officer, will also be available during the Q&A session. Please note that a supplemental slide presentation has been made available on our website to accompany today’s earnings release. Now, let me reference the Safe Harbor provisions under the Securities Litigation Reform Act of 1995.

This call may contain certain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of the company. In many cases, these risks and uncertainties are beyond our control. Although the company believes the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct, and actual results may differ materially from expectations. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included at end of the press release issued today and in the company’s filings with the Securities and Exchange Commission.

The information contained in this call is accurate only as of the date discussed. Investors should not assume that statements will remain operative at a later time. Tractor Supply undertakes no obligation to update any information discussed in this call. [Operator instructions] We appreciate your understanding and cooperation.

We will also be available after the call for any further discussions. Thank you for your time and attention this morning. And now it’s my pleasure to turn the call over to Hal.

Harry A. Lawton, III — President and Chief Executive Officer

Good morning, and thank you to everyone for joining our call today. Before we begin, I would like to acknowledge the recent wildfires and winter storms. Our thoughts and prayers are with all those affected. I’d also like to express our deepest appreciation to the first responders who worked tirelessly to protect our communities during these challenging times.

Our Tractor Supply team has and will continue to stand with our communities as they recover from these events. The opening video, I think, did an excellent job highlighting the key accomplishments of the Tractor Supply team in 2024. And my sincere appreciation and gratitude go out to the team the team for all they do. Over the year, our consistently executed with distinction and delivered solid results in a tepid retail environment.

Additionally, the team made progress against our Life Out Here strategy, enabling continued market share gains and future growth. Now, let’s go through some of our highlights specific to the fourth quarter and the fiscal year, starting with financials. In the fourth quarter, our net sales grew 3.1%, and comparable store sales increased 0.6%, driven by strong comp transaction growth of 2.3%. And our fourth-quarter diluted EPS was $0.44.

For the fiscal year, we achieved record financial results on both the top and bottom line. Net sales were nearly $14.9 billion, growing 2.2% versus 2023 with a comp store sales increase of 0.2%. Diluted earnings per share were also a record $2.04 on a split-adjusted basis. And our digital business reached another year of record sales, topping over $1.1 billion.

And I’ll note, these results are on top of record performance over the last four years. In 2024, we also generated a record $1.4 billion in operating cash flow. And we use this cash flow to fund the business and attractive growth opportunities. In 2024, we opened 80 new Tractor Supply stores and 11 Petsense stores.

The team has done a fantastic job opening highly productive new stores as this remains a core strength and competency of Tractor Supply. Other business investments we made in 2024 include a new distribution center in Maumelle, Arkansas, and more than 160 Fusion remodels. After funding our business in these initiatives, for the fourth consecutive year, we returned more than $1 billion to our shareholders through the combination of dividends and share repurchases. And 2024 marked the 15th consecutive year of dividend growth for Tractor Supply.

And finally, at the conclusion of the year, we successfully acquired Allivet, and we look forward to integrating Allivet into our business and offering it to our millions of Neighbor’s Club members who are pet owners. In addition to these financial results and even more importantly, perhaps, our team member and customer engagement has never been stronger. Frontline team member attrition is at a record low. Total active customer accounts are at record highs.