Tractor Supply Company

Good morning, ladies and gentlemen, and welcome to Tractor Supply Company's conference call to discuss third quarter 2025 results. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. We ask that all participants limit themselves to one question and return to the queue for additional questions. Please note that the queue for our question and answer session did not open until the start of this call. 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. I would now like to introduce your host for today's call, Mary Wynn Pilkington, Senior Vice President of Investor and Public Relations for Tractor Supply Company. Mary Wynn, please go ahead.

Thank you, Alyssa. Good morning, everyone. We appreciate your time and participation in today's call. On the call today, participating in our prepared remarks are Hal Lawton, our Chief Executive Officer, and Kurt Barton, our CFO. We will also have Seth Estep, Rob Mills, John Ortis, and Colin Yankee join the call for the question and answer portion. Following our prepared remarks, we will open the floor for questions. 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 Private Securities Litigation Reform Act of 1995. This call may contain certain forward-looking statements that are subject to significant risk 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 the 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. As we move into the Q&A session, please limit yourself to one question to ensure everyone has the opportunity to participate. If you have additional questions, please feel free to rejoin the queue. 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 Lawton.

Thank you, Mary Wynn, and good morning, everyone, and thank you for joining us today. Before getting into our results, I want to thank our more than 52,000 Tractor Supply team members. Their commitment, hard work, and passion for life out here continue to set us apart. By delivering legendary service, they build the trust and loyalty that defined our brand. and their dedication to our lifestyle remains the foundation of our leadership in rural retail. The Tractor Supply team delivered a strong third quarter, in line with our expectations, driven by ongoing share gains in our consumable, usable, and edible businesses, agile execution through an extended summer season, and healthy transaction growth that was supported by our consistent focus on value and service. Our view is that our third quarter results largely mirrored the broader U.S. consumer environment augmented by some share gain. We saw a strong start to the quarter with spending trends moderating into September. This pattern aligned with what we observed across the retail landscape, and in our case was amplified by two key dynamics. First, the tailwind of an extended spring in July, and second, the headwinds of an unseasonably warm weather in September and the absence of emergency response. So let's start with a few top line sales highlights from the quarter. First off, we grew net sales 7.2% to a third quarter record of 3.72 billion. Comparable store sales increased 3.9%, driven by a balance of transaction growth of 2.7% and average ticket growth of 1.2%. And importantly, we had positive comps in all three months, positive comps in 11 weeks, a flat comp in one, and negative comps in only one week. We are particularly pleased to extend our track record of comp transaction growth, a hallmark of tractor supply, and a strong signal of the health and engagement of our customer base. Our customers remain loyal and connected to their lifestyle, continuing to shop with us across categories and channels. And so let's turn to some customer engagement metrics, which remain to clear strength in the quarter. First, customer satisfaction remained strong, with scores continuing their positive trajectory, marking a record 17 quarters of consecutive improvement. Additionally, we achieved record Q3 highs across some key customer metrics, including total customer count, Neighbors Club membership, reactivated customers, and retention rates. Neighbors Club continues to be a powerful differentiator and represents over 80% of our sales. We saw gains in member retention and spend per member, and our Hometown Heroes program continues to attract new customers. We're also making progress on how we serve customers using data. With the implementation of our new customer data platform last year, our team is now able to better personalize offers and messaging, helping us deliver more relevant and engaging experiences across channels. Now let's shift to category performance in the third quarter. In line with recent quarters, the consumer remained discerning in their spending with categories that offered newness, strong value, and needs-based continuing to outperform. Our comp sales growth was driven by strong seasonal performance in spring and summer products, along with continued momentum in our core year-round Q categories. As we move from the second quarter into the third, seasonal categories strengthen meaningfully. After a more modest first half, we benefited from the bathtub effect of the extended summer season. We believe this was about a 50 to 60 basis point contribution to the third quarter that would have historically been in the first half. As it relates to seasonal, the team did a great job capitalizing on the elongated summer season. Whether through strategically positioned inventory, enhanced financing offers, or targeted labor investments, across the company, our merchants, to our store teams, to our supply chain, the organization leaned in to capture every single sales opportunity. A great example of that execution was in our tractors and riders category, which delivered another strong quarter. Our industry-leading lineup of zero-turn mowers, combined with the disciplined inventory management and effective merchandising, continued to resonate with customers and drove share gains in this category in the quarter. Additionally, other categories in seasonal that saw standout results were lawn and garden, sprayers and chemicals, and power equipment parts and accessories. In our hallmark area of Q, we saw stronger than average growth in livestock, equine, poultry feeding supplies, and wildlife supplies. And in wildlife supplies, we continue to expand our position as a destination for outdoor enthusiasts across gun safes, deer corn, feeders, hunting blinds, attractants, trail cameras, and more. Our customers are responding to the depth of the inventory and the newness that we're bringing into the category, including the launch of the Field & Stream brand. We now have nearly 50 SKUs in this brand available in-store and online with a robust pipeline and development. And this launch strengthens our position as the destination for the out-here lifestyle. In discretionary and weather-dependent categories, particularly those in the fall season, such as recreational vehicles, grilling, safes, and generators, sales continued to lag, reflecting both the cautious big-ticket consumer and the absence of storm-related activity this year. As it relates to big ticket, overall, the strength in tractors and riders offset the softness I just mentioned in discretionary and emergency response categories, resulting in essentially a flat comp performance for the quarter. And finally, in companion animal, trends remain stable but below company averages. The consumables business remains flattish with seasonal strength in animal health, and we have seen some sequential improvement in pet supplies and equipment as well. We also continue to execute well across our strategic initiatives and operational priorities. Digital sales grew at a low double-digit rate, representing a notable sequential improvement from the second quarter. Nearly 80% of online orders were fulfilled by our stores, highlighting the strength of our local network and store base. Same day delivery and deliver from store outperformed, reinforcing the convenience and reliability of our model and the value of the final model capabilities that we're building out. PetSense by Tractor Supply marked its 20th anniversary. Congratulations to that team. And it highlights the differentiated pet specialty model out in rural America. Our distribution centers delivered another strong quarter of productivity gains, supported by disciplined execution and efficient inventory flow across the network. This execution helped ensure we remained in stock on the product our customers count on, particularly with the extended seasonal demand. Turning to pet pharmacy, we continue to see steady growth in orders and customer adoption. Each week, we're seeing an increase in Neighbors Club subscriptions of prescription and over-the-counter products, leveraging our Alibet acquisition. Our customers continue to engage with our suite of pet services, which also includes pet washes and vet clinics. On the real estate front, we remain disciplined and confident in our growth strategy. We opened 29 new tractor supply stores in the quarter, bringing our year-to-date total to 68. New store productivity continues to perform very well. Our pipeline of 2026 and into 2027 remains robust with significant runway for low risk, value creating, organic growth ahead. We also continue to invest in our existing store fleet. We now have 55% of our chain in the Project Fusion layout and nearly 700 garden centers. These are capital investments that provide a multi-year runway for growth and extend the terminal value of our stores. They help us be more relevant to both our core customers and our new customers, allowing us to garner a greater share of their spending and be the dependable supplier for their lifestyle. Finally, we're making solid progress on advancing our Life Out Here strategic initiatives with a focus on direct sales and final mile. These initiatives strengthen our foundation for long-term growth and relevancy to our customers. To summarize, the third quarter demonstrated the strength and consistency of our model, healthy customer engagement, strong execution, and continued progress on our life out here strategy. As we look ahead, we believe it is appropriate and timely to narrow our fiscal 2025 guidance. This guidance reflects our year-to-date performance and outlook for the remainder of the year. We remain excited about our strategy and our ability to deliver long-term value for our shareholders. And with that, I'll turn the call over to Kurt to provide more detail on our performance and outlook.