• Earnings per Share Increased 17.9% to $1.45
• Raises Full Year 2012 EPS Guidance
• Sales Increased 9.6% to $1.29 Billion and Same-Store Sales Increased 3.2%

ractor Supply Company, the largest retail farm and ranch store chain in the United States, today announced financial results for its second fiscal quarter ended June 30, 2012.

Second Quarter Results

Net sales increased 9.6% to $1.29 billion from $1.18 billion in the prior year's second quarter. Same-store sales increased 3.2% compared to a 4.6% increase in the prior-year period. The same-store sales increase was driven primarily by continued strong results in key consumable, usable and edible (C.U.E.) products, principally animal- and pet-related merchandise. The Company estimates that approximately $38 million of sales were pulled forward into the first quarter from the second quarter as a result of early spring weather, which is at the high end of the previously communicated range.

Each quarter of fiscal 2012 starts one week later than the same quarter of fiscal 2011 due to the company's 2011 fiscal year having 53 weeks versus the normal 52 weeks. Adjusting for the one-week calendar shift, same-store sales for the second quarter of 2011 increased 7.1%. Same-store sales for the four quarters and full year of 2011, adjusted for the one-week calendar shift, are presented in the attached table of Selected Financial and Operating Information.

Gross margin dollars increased 12.2% to $451.5 million from $402.5 million in the prior year's second quarter. As a percent of sales, gross margin increased to 34.9% from 34.1% in the prior year. The increase in gross margin as a percent of sales was primarily driven by the favorable impact of a lower percent of sales mix of low margin, big ticket seasonal and emergency response products.

Selling, general and administrative expenses, including depreciation and amortization, improved slightly to 21.8% of sales compared to 21.9% of sales in the prior year's second quarter. The improvement as a percent of sales was primarily attributable to expense control with respect to store personnel and other operating costs.

Net income for the quarter was $106.6 million, or $1.45 per diluted share, compared to net income of $91.2 million, or $1.23 per diluted share, in the second quarter of the prior year.

The company opened 18 new stores compared to 16 new store openings in the prior year's second quarter.

Jim Wright, Chairman and Chief Executive Officer, stated, "We are pleased with our ability to generate double-digit EPS growth during the second quarter, while operating in a stagnant economy and navigating weather shifts and unfavorable drought conditions. The pull-forward of spring category demand into the first quarter from the second quarter was at the high end of our previously communicated range, while all core C.U.E. businesses posted solid increases above last year. Our operating performance and 17th consecutive quarter of comp transaction count increases are testaments to the stability we have built in our business and continue to demonstrate the progress we are making on many of our key initiatives. We remain committed to our strategy of providing exceptional value to our customers, while we continue to evolve our assortments and the in-store experience."

First Six Months Results

Net sales increased 14.8% to $2.31 billion from $2.01 billion in the first six months of 2011. Same-store sales increased 6.7% compared to a 7.0% increase in the first six months of 2011. Gross margin dollars increased 16.0% to $784.3 million, or 33.9% of sales, compared to $676.1 million, or 33.6% of sales, in the first six months of 2011.

Selling, general and administrative expenses, including depreciation and amortization, increased 9.3% to $550.0 million, but improved as a percent of sales to 23.8% compared to 25.0% for the first six months of 2011.

Net income was $146.9 million, or $2.00 per diluted share, compared to net income of $109.5 million, or $1.47 per diluted share, for the first six months of 2011.

The company opened 51 new stores and closed one store in the first six months of 2012 compared to 42 new store openings during the first six months of 2011.

Company Outlook

Net sales for the full-year 2012 are now expected to range between $4.58 billion and $4.65 billion compared to the company's previously expected range of $4.61 billion to $4.68 billion. Same-store sales for the year are now expected to increase 3.5% to 5.0% compared to the prior expectation for an increase of 4.0% to 5.5%. Based on stronger than expected net income per diluted share for the second quarter, the company now anticipates net income per diluted share for the full-year 2012 will range between $3.58 and $3.66, compared to its previous guidance of $3.52 to $3.60.

Mr. Wright concluded, "Our second quarter performance shows the underlying strength of our core businesses, as well as our ability to manage through and respond to a wide array of variables. Our team is actively managing the product assortment to meet customer needs in the affected markets as the drought continues to spread and intensify. As demonstrated in the past, we have the ability to effectively react to seasonal variances. Looking to the second half of 2012, we remain energized about the opportunities we see ahead and will continue to build on the progress we have made in the areas of inventory management, merchandise allocation and regionalization. We have built a stable and differentiated business that serves a unique niche in the retail marketplace."

Conference Call Information

Tractor Supply Company will be hosting a conference call at 5:00 p.m. Eastern Time today to discuss the quarterly results. The call will be broadcast simultaneously over the Internet on the Company's homepage at TractorSupply.com and can be accessed under the link "Investor Relations." The webcast will be archived shortly after the conference call concludes and will be available through August 8, 2012.

Condensed Consolidated Statements of Income Click to enlarge

Condensed Consolidated Balance Sheets Click to enlarge

Condensed Consolidated Statements of Cash Flows Click to enlarge

Selected Financial and Operating Information Click to enlarge

2011 Same Store Sales Click to enlarge

At June 30, 2012, Tractor Supply Company operated 1,135 stores in 45 states. The Company's stores are focused on supplying the lifestyle needs of recreational farmers and ranchers. The Company also serves the maintenance needs of those who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located in towns outlying major metropolitan markets and in rural communities. The Company offers the following comprehensive selection of merchandise: (1) equine, pet and small animal products, including items necessary for their health, care, growth and containment; (2) hardware, truck, towing and tool products; (3) seasonal products, including lawn and garden items, power equipment, gifts and toys; (4) maintenance products for agricultural and rural use; and (5) work/recreational clothing and footwear.