Tractor Supply Company

Good morning, ladies and gentlemen, and welcome to Tractor Supply Company's conference call to discuss first quarter 2026 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, Victoria. 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 CEO, Kurt Barton, our CFO, and Seth Estep, our Chief Merchandising Officer. In addition to Seth, we will also have Rob Mills, John Ortis, and Colin Yankee join the call for the question and answer portion. Following our prepared marks, we will open the floor for questions. 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. Now let me turn the call over to Hal.

Thank you, Mary Wynn, and good morning, everyone. Before we begin, I want to thank our more than 52,000 tractor supply team members. Their commitment and passion for life out here continue to set us apart, and their dedication to delivering legendary service remains the foundation of our leadership in rural retail. The retail environment remains cautious but stable, with spending focused on needs and small indulgences, with some evidence of trip consolidation. Within farm and ranch, the broader market is slowed, though we continue to gain share. In fact, we estimate we had one of our best share performances in Q1. In pet, the category remains pressured, and while we are holding our share, our performance is below our expectations. A good example of the consumer's spending is around their taxed refund behavior. While refunds did come through and we captured our fair share, customers are using these dollars more cautiously. A significant portion is going towards essentials, savings and debt reduction, rather than discretionary spending, consistent with the broader environment we're seeing. Our needs-based model continues to perform as expected in this environment, demonstrating its resiliency. We are seeing that inconsistent demand across our core categories and continued engagement from our customers. In the first quarter, that played out in distinct phases, driven by weather timing. We ended the year lapping two years of significant storms, which created a slower start, followed by a major storm event that drove a pickup in demand. Trends then normalized through the middle of the quarter before a mixed finish, with a good start to spring in the south, more than offset by continued weather pressure in the north. Overall, weather was neutral to our performance in the quarter. Against that backdrop, I'm very pleased with our execution in the quarter. The team responded well to winter storms, activated strong events and around holidays, and regionalized our marketing based on weather patterns. And we executed a clean transition into spring and chick days with encouraging early results. We remain focused on executing across the business. advancing new store growth expanding exclusive brands and maintaining disciplined sgna control while continuing to make progress on our strategic initiatives gross margin remained in line with our expectations with ongoing pressure from tariffs cost inflation and freight which we continue to actively manage turning to our customers Growth was driven by new stores and our existing customer base, with store traffic increasing in low single digits and conversion in their stores roughly flat. Active customer counts grew, though visit frequency declined modestly. We saw continued strength in our high-value customers with solid retention and engagement, supported by continued growth in neighbors club penetration and higher engagement from our most valuable members, while new customer acquisition remained softer and was most reliant on new stores. Turning to our first quarter results, net sales increased 3.6% to $3.59 billion, driven by new store openings. We opened a record 40 tracks of supply stores in the quarter, and new store productivity remained in the 65% to 70% range. New stores remain a hallmark of our performance. Diluted earnings per share were $0.31. Comparable store sales increased 0.5%, with average ticket up 1.6%, and transactions down 1%. Four of our five product categories were positive, and six of our seven geographic regions delivered positive results, reflecting the broad-based strength of the business. With the exception of companion animal, our consumable, usable, and edible categories delivered consistent performance in line with our expectations, led by poultry feed, bedding, livestock feed, and equine feed. Companion animal performance reflects a number of structural headwinds. Sales were below the chain average, reflecting these dynamics. Dog ownership, particularly in larger breeds, has come under pressure, and our mix remains heavily weighted towards dog, where we over-index by roughly 20 points. Cat ownership is growing and gaining share, and that's where we under-index. Both species are also shifting towards fresh and premium nutrition, where again, we are under-indexed. And our pace of share gains in both dog and cat has slowed. All this said, we are taking clear and decisive actions to strengthen our position, including expanding our fresh pet offering, increasing cat assortment, and enhancing our services and RX capabilities. And Seth will walk through these and more in detail. seasonal categories developed more gradually early in the quarter with spring category strengthening as the season progressed overall we saw solid performance across both our winter and spring assortments big ticket categories performed above the chain average with strengthened tractors and riders generators and welding partially offset by softness and chicken coops trailers and recreational vehicles our digital business also continues to perform at a very high level with strong double-digit growth in the quarter, and we saw meaningful increases in traffic along with improved conversion, reflecting the strength of our omnichannel experience. We've made targeted enhancements across our platform, including improvements to how customers shop and navigate our assortment, as well as upgrades to our subscription offering, as well as our order management and checkout experiences. These efforts are driving a more seamless and efficient experience and supporting continued momentum in the business. As we look beyond the quarter, we continue to make progress on our Life Out Here 2030 priorities. On localization, results are encouraging as we tailor assortments to local needs, with more than 200 stores now localized and delivering improved performance and stronger customer engagement. In direct sales, momentum continues to build as we expand our sales force and deepen relationships with our higher value customers. And this is driving increased productivity, larger basket sizes, and repeat engagement. In Final Mile, we're scaling our delivery network, adding hubs and increasing delivery volume, supporting the continued strength in our digital business while improving efficiency and reducing our cost to serve. Within Pet and Animal Rx, we're seeing encouraging progress across both Alavet and TractorSupply.com as we expand our offering and enhance convenience for customers while driving engagement with new and reoccurring purchases. As we look ahead, we're seeing our typical seasonal ramp take hold as we build towards Memorial Day. With stronger seasonal penetration and improving trends in the north, we expect sequential improvement in comparable sales relative to the first quarter. We continue to see strength across our customer base and in the majority of our business. We're taking targeted actions in areas of opportunity while continuing to execute on our strategic priorities. We remain focused on what we can control, investing with discipline, managing costs, and most importantly, as always, serving our customers. That approach continues to position us to drive market share gains and long-term value. Lastly, we are reaffirming our full-year outlook. And with that, I'll turn the call over to Kurt.