BRENTWOOD, Tenn. — Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retailer in the United States, today reported financial results for its third quarter ended September 25, 2021.

“The third quarter marks our sixth consecutive quarter of double-digit comparable store sales growth. We are once again very pleased with the overall performance of our business, which exceeded our expectations. Our outstanding results are indicative of the hard work and dedication of the more than 45,000 Team Members of Tractor Supply who are successfully navigating the challenging and ever-changing external environment,” said Hal Lawton, Tractor Supply’s president and chief executive officer.

“Over 18 months into the pandemic, our business has never been stronger. Our growth continues to be robust. Our customer trends remain structurally sound. We are continuing to gain market share and invest in the business to capture the significant opportunities ahead of us. As we advance our multiyear Life Out Here Strategy, we are beginning to realize the benefits from our strategic initiatives. Despite unprecedented pressures across our supply chain, we are raising our outlook for fiscal 2021 and are on track for a record year of sales and earnings,” Lawton added.

Third Quarter 2021 Results

Net sales for the third quarter 2021 increased 15.8% to $3.02 billion from $2.61 billion in the third quarter of 2020. Comparable store sales increased 13.1%, as compared to an increase of 26.8% in the prior year’s third quarter. Comparable store sales for the third quarter 2021 were driven by comparable average ticket growth and comparable average transaction count growth of 9.5% and 3.6%, respectively. The comparable store sales results were broad-based and reflect robust demand for everyday merchandise, including consumable, usable and edible (“C.U.E.”) products, and continued growth in summer seasonal categories. All geographic regions and major merchandising categories of the Company had comparable store sales growth. In addition, the Company’s e-commerce sales experienced strong double-digit growth for the 37th consecutive quarter.

Gross profit increased 14.5% to $1.09 billion from $948.0 million in the prior year’s third quarter, and gross margin decreased 41 basis points to 36.0% from 36.4% in the prior year’s third quarter. The Company’s price management actions, primarily due to inflationary cost pressures, and other margin driving initiatives were able to offset most of the impact from significant product cost inflation pressures, higher transportation costs and a product mix shift towards C.U.E. categories.

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased 13.3% to $788.1 million from $695.8 million in the prior year’s third quarter. As a percent of net sales, SG&A expenses improved 58 basis points to 26.1% from 26.7% in the third quarter of 2020. The improvement in SG&A as a percent of net sales was primarily attributable to leverage in occupancy and other fixed costs from the increase in comparable store sales, lower COVID-19 pandemic response costs and decreased incentive compensation. The leverage from these SG&A expenses was partially offset by higher wage rates, additional store labor hours, investments in the Company’s strategic initiatives and other discrete costs specific to the current operating environment.

Operating income increased 17.9% to $297.2 million compared to $252.2 million in the third quarter of 2020.

The effective income tax rate was 22.9% compared to 22.2% in the third quarter of 2020.

Net income increased 17.7% to $224.4 million from $190.6 million, and diluted earnings per share increased 20.4% to $1.95 from $1.62 in the third quarter of 2020.

The Company repurchased approximately 0.7 million shares of its common stock for $141.3 million and paid quarterly cash dividends totaling $59.4 million, returning $200.6 million of capital to shareholders in the third quarter of 2021.

The Company opened 12 new Tractor Supply stores and three new Petsense stores in the third quarter of 2021.

First Nine Months of Fiscal 2021 Results

Net sales for the first nine months of 2021 increased 21.6% to $9.41 billion from $7.74 billion in the first nine months of 2020. Comparable store sales increased 18.5% versus a 21.5% increase in the first nine months of 2020.

Gross profit increased 21.4% to $3.36 billion from $2.77 billion, and gross margin was 35.7% in the first nine months of 2021 and 2020.

SG&A expenses, including depreciation and amortization, increased 19.9% to $2.34 billion from $1.95 billion but decreased as a percent of net sales to 24.9% compared to 25.2% for the first nine months of 2020.

Operating income increased 24.8% to $1.01 billion compared to $812.5 million in the first nine months of 2020.

The effective income tax rate was 21.9% compared to 22.6% in the first nine months of 2020.

Net income increased 26.5% to $775.8 million from $613.1 million, and diluted earnings per share increased 27.7% to $6.68 from $5.23 for the first nine months of 2020.

Year to date through the third quarter, the Company has repurchased approximately 3.5 million shares of its common stock for $598.0 million. The Company has also paid quarterly cash dividends totaling $179.8 million year to date, returning $777.8 million of capital to shareholders.

During the first nine months of 2021, the Company opened 44 new Tractor Supply stores and six new Petsense stores and closed 11 Petsense stores.

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