Tractor Supply (NASDAQ: TSCO) reported Q1 EPS of $0.71, $0.01 better than the analyst estimate of $0.70. Revenue for the quarter came in at $1.96 billion versus the consensus estimate of $1.95 billion.

• Net Sales Increased 7.5%; Comparable Store Sales Increased 4.3%
• Diluted Earnings Per Share Increased 12.7% to $0.71
• Actions Taken to Prioritize Investments in Safety and Convenience and Improve Liquidity

“Our year-to-date results underscore the importance of Tractor Supply as an essential, needs-based retailer. Tractor Supply delivered solid results in the first quarter, and second quarter sales are off to a strong start,” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer. “I can’t thank the Tractor Supply team members enough for their dedication and support of each other and our customers. During these unprecedented times, I am incredibly proud of how the team is responding. The health and safety of our team members and customers will continue to be our highest priority. Across our business, we have taken more than 100 actions in response to the COVID-19 crisis with a focus on being preemptive and proactive. Tractor Supply has a strong and resilient business model, and we are confident we will emerge from the crisis even stronger.”

Lawton continued, “At this critical time, Tractor Supply is committed to supporting our customers’ ability to take care of their families, property and animals. We are leveraging our strengths and pursuing opportunities as we adapt to our customers’ changing needs, as they rely on us to be the dependable supplier to support their lifestyle.”

Fiscal 2020 and Liquidity

Given the uncertainty related to the COVID-19 pandemic, the Company withdrew its guidance for fiscal 2020 on April 7, 2020. The uncertainties related to the COVID-19 pandemic include, but are not limited to: how macroeconomic factors evolve, including unemployment rates; the impact of the crisis on consumer shopping patterns; the timing of when consumer stimulus checks arrive; the duration and degree of quarantine measures, including additional measures that may still occur; uncertainty in the economy in the remainder of 2020; and the incremental costs of doing business as an essential, needs-based retailer in the current environment. For the second quarter of 2020, the net incremental costs of doing business as an essential retailer are currently anticipated to be in the range of $30 million to $50 million.

Capital expenditures for fiscal 2020 are still expected to be in the range of $225 million to $275 million. The Company is moving ahead with its new store opening program, but the timing of new store openings in some areas may be delayed as a result of the COVID-19 pandemic, including local and state orders.

Tractor Supply’s strong balance sheet, coupled with its robust operating cash flow, provide the Company with significant financial flexibility. Preemptive actions to strengthen its liquidity and preserve cash while navigating the COVID-19 pandemic include:

• Suspending its share repurchase program effective March 12, 2020,
• Borrowing $200 million on March 12, 2020 under the accordion feature of the Company’s existing credit facility, and
• Entering into an amendment to the Company’s credit facility on April 22, 2020, under which the Company borrowed an additional $350 million.

At this time, the Company does not expect to suspend or reduce its quarterly cash dividend.

COVID-19 UpdateT

ractor Supply has taken a number of immediate steps to adjust to the impact of COVID-19. During the first quarter, incremental operating costs related to COVID-19 were approximately $7 million. The primary contributing factors to these costs were appreciation bonuses to frontline team members, medical and sick leave coverage and sanitation and safety supplies. As previously stated, the net incremental costs of these actions in response to COVID-19 are currently anticipated to be between $30 to $50 million in the second quarter.

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