Item 1. Financial Statements

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Item 1. Financial Statements

TRACTOR SUPPLY COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Unaudited)


	For the Fiscal Three				For the Fiscal Nine
	Months Ended				Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net sales	$	3,468,245	$	3,411,980	$	11,109,700	$	10,895,900
Cost of merchandise sold	2,177,797		2,161,501		7,042,773		6,960,744
Gross profit	1,290,448		1,250,479		4,066,927		3,935,156
Selling, general and administrative expenses	852,299		819,311		2,590,637		2,500,704
Depreciation and amortization	113,550		90,263		327,107		289,775

Operating income	324,599		340,905		1,149,183		1,144,677
Interest expense, net	13,875		9,539		37,389		34,562
Income before income taxes	310,724		331,366		1,111,794		1,110,115
Income tax expense	69,254		76,365		246,960		250,792
Net income	$	241,470	$	255,001	$	864,834	$	859,323

Net income per share – basic	$	2.25	$	2.34	$	8.04	$	7.85
Net income per share – diluted	$	2.24	$	2.33	$	8.00	$	7.81

Weighted average shares outstanding:
Basic	107,167		108,774		107,614		109,415
Diluted	107,678		109,342		108,147		110,055

Dividends declared per common share outstanding	$	1.10	$	1.03	$	3.30	$	3.09

The accompanying notes are an integral part of these Consolidated Financial Statements.


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TRACTOR SUPPLY COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(Unaudited)


	September 28,		December 30,		September 30,
	2024		2023		2023
ASSETS
Current assets:
Cash and cash equivalents	$	186,294	$	397,071	$	421,693

Inventories	3,082,519		2,645,854		2,834,247
Prepaid expenses and other current assets	199,967		218,553		278,174
Income taxes receivable	14,381		2,461		—
Total current assets	3,483,161		3,263,939		3,534,114
Property and equipment, net	2,632,895		2,437,184		2,273,646
Operating lease right-of-use assets	3,295,678		3,141,971		3,084,947
Goodwill and other intangible assets	269,520		269,520		267,329

Other assets	86,643		75,537		44,978
Total assets	$	9,767,897	$	9,188,151	$	9,205,014
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,349,817	$	1,179,803	$	1,412,186
Accrued employee compensation	53,065		91,478		49,957
Other accrued expenses	551,847		533,029		454,513

Current portion of finance lease liabilities	3,402		3,311		3,304
Current portion of operating lease liabilities	387,578		369,461		365,189
Income taxes payable	—		—		33,647

Total current liabilities	2,345,709		2,177,082		2,318,796
Long-term debt	1,831,218		1,728,964		1,728,255
Finance lease liabilities, less current portion	28,831		31,388		32,156
Operating lease liabilities, less current portion	3,082,653		2,902,858		2,848,385
Deferred income taxes	48,800		60,032		30,006

Other long-term liabilities	141,926		138,065		136,285
Total liabilities	7,479,137		7,038,389		7,093,883
Stockholders’ equity:
Preferred stock	—		—		—
Common stock	1,423		1,419		1,418
Additional paid-in capital	1,362,463		1,318,446		1,302,268
Treasury stock	(5,869,286)		(5,458,855)		(5,347,302)
Accumulated other comprehensive income	2,550		6,793		9,292
Retained earnings	6,791,610		6,281,959		6,145,455
Total stockholders’ equity	2,288,760		2,149,762		2,111,131
Total liabilities and stockholders’ equity	$	9,767,897	$	9,188,151	$	9,205,014

Preferred Stock (shares in thousands): $1.00 par value; 40 shares authorized; no shares were issued or outstanding during any period presented.

Common Stock (shares in thousands): $0.008 par value; 400,000 shares authorized for all periods presented. 177,845, 177,332, and 177,288 shares issued; 106,921, 107,976, and 108,474 shares outstanding at September 28, 2024, December 30, 2023, and September 30, 2023, respectively.

Treasury Stock (at cost, shares in thousands): 70,924, 69,356, and 68,814 shares at September 28, 2024, December 30, 2023, and September 30, 2023, respectively.

The accompanying notes are an integral part of these Consolidated Financial Statements.


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TRACTOR SUPPLY COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	For the Fiscal Three				For the Fiscal Nine
	Months Ended				Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income	$	241,470	$	255,001	$	864,834	$	859,323
Other comprehensive (loss) / income:
Change in fair value of interest rate swaps, net of taxes	(2,130)		(924)		(4,243)		(1,983)
Total other comprehensive (loss) / income	(2,130)		(924)		(4,243)		(1,983)
Total comprehensive income	$	239,340	$	254,077	$	860,591	$	857,340

The accompanying notes are an integral part of these Consolidated Financial Statements.


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TRACTOR SUPPLY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


	Common Stock				Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. Income (Loss)		Retained Earnings		Total Stockholders’ Equity
Shares		Dollars
Stockholders’ equity at December 30, 2023	107,976		$	1,419	$	1,318,446	$	(5,458,855)	$	6,793	$	6,281,959	$	2,149,762
Common stock issuance under stock award plans & ESPP	412		3		21,715								21,718
Share-based compensation expense					14,448								14,448
Repurchase of shares to satisfy tax obligations					(22,001)								(22,001)
Repurchase of common stock	(496)						(118,543)						(118,543)
Cash dividends paid to stockholders											(118,809)		(118,809)
Change in fair value of interest rate swaps, net of taxes									(731)				(731)
Net income											198,167		198,167
Stockholders’ equity at March 30, 2024	107,892		$	1,422	$	1,332,608	$	(5,577,398)	$	6,062	$	6,361,317	$	2,124,011

Common stock issuance under stock award plans & ESPP	66		1		6,630								6,631
Share-based compensation expense					10,676								10,676
Repurchase of shares to satisfy tax obligations					(716)								(716)
Repurchase of common stock	(511)						(140,546)						(140,546)
Cash dividends paid to stockholders											(118,538)		(118,538)
Change in fair value of interest rate swaps, net of taxes									(1,382)				(1,382)
Net income											425,196		425,196
Stockholders’ equity at June 29, 2024	107,447		$	1,423	$	1,349,198	$	(5,717,944)	$	4,680	$	6,667,975	$	2,305,332

Common stock issuance under stock award plans & ESPP	35		—		4,167								4,167
Share-based compensation expense					9,999								9,999
Repurchase of shares to satisfy tax obligations					(901)								(901)
Repurchase of common stock	(561)						(151,342)						(151,342)
Cash dividends paid to stockholders											(117,835)		(117,835)
Change in fair value of interest rate swaps, net of taxes									(2,130)				(2,130)
Net income											241,470		241,470
Stockholders’ equity at September 28, 2024	106,921		$	1,423	$	1,362,463	$	(5,869,286)	$	2,550	$	6,791,610	$	2,288,760


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	Common Stock				Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. Income / (Loss)		Retained Earnings		Total Stockholders’ Equity
Shares		Dollars
Stockholders’ equity at December 31, 2022	110,251		$	1,415	$	1,261,283	$	(4,855,909)	$	11,275	$	5,624,352	$	2,042,416
Common stock issuance under stock award plans & ESPP	275		2		8,621								8,623
Share-based compensation expense					14,514								14,514
Repurchase of shares to satisfy tax obligations					(21,643)								(21,643)
Repurchase of common stock	(866)						(197,168)						(197,168)
Cash dividends paid to stockholders											(113,447)		(113,447)
Change in fair value of interest rate swaps, net of taxes									(1,837)				(1,837)
Net income											183,088		183,088
Stockholders’ equity at April 01, 2023	109,660		$	1,417	$	1,262,775	$	(5,053,077)	$	9,438	$	5,693,993	$	1,914,546

Common stock issuance under stock award plans & ESPP	90		1		6,628								6,629
Share-based compensation expense					15,665								15,665
Repurchase of shares to satisfy tax obligations					(1,479)								(1,479)
Repurchase of common stock	(692)						(157,447)						(157,447)
Cash dividends paid to stockholders											(112,774)		(112,774)
Change in fair value of interest rate swaps, net of taxes									778				778
Net income											421,234		421,234
Stockholders’ equity at July 01, 2023	109,058		$	1,418	$	1,283,589	$	(5,210,524)	$	10,216	$	6,002,453	$	2,087,152

Common stock issuance under stock award plans & ESPP	48		—		4,601								4,601
Share-based compensation expense					14,971								14,971
Repurchase of shares to satisfy tax obligations					(893)								(893)
Repurchase of common stock	(632)						(136,778)						(136,778)
Cash dividends paid to stockholders											(111,999)		(111,999)
Change in fair value of interest rate swaps, net of taxes									(924)				(924)
Net income											255,001		255,001
Stockholders’ equity at September 30, 2023	108,474		$	1,418	$	1,302,268	$	(5,347,302)	$	9,292	$	6,145,455	$	2,111,131

The accompanying notes are an integral part of these Consolidated Financial Statements.


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TRACTOR SUPPLY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	For the Fiscal Nine Months Ended
	September 28, 2024		September 30, 2023
Cash flows from operating activities:
Net income	$	864,834	$	859,323
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	327,107		289,775
(Gain)/loss on disposition of property and equipment	(38,751)		(27,460)
Share-based compensation expense	35,124		45,150
Deferred income taxes	(21,212)		8,082
Change in assets and liabilities:
Inventories	(436,665)		(147,521)
Prepaid expenses and other current assets	9,092		(28,647)
Accounts payable	170,014		13,554
Accrued employee compensation	(38,413)		(73,019)
Other accrued expenses	(227)		(53,795)
Income taxes	(11,920)		24,176
Other	44,627		28,308
Net cash provided by operating activities	903,610		937,926
Cash flows from investing activities:
Capital expenditures	(538,018)		(526,723)
Proceeds from sale of property and equipment	77,895		57,801
Proceeds from Orscheln acquisition net working capital settlement	—		4,310
Proceeds from sale of Orscheln corporate headquarters and distribution center	—		10,000
Net cash used in investing activities	(460,123)		(454,612)
Cash flows from financing activities:
Borrowings under debt facilities	585,000		1,767,000
Repayments under debt facilities	(485,000)		(1,195,000)
Debt discounts and issuance costs	—		(9,729)

Principal payments under finance lease liabilities	(1,317)		(3,606)
Repurchase of shares to satisfy tax obligations	(23,618)		(24,015)
Repurchase of common stock	(406,663)		(480,407)
Net proceeds from issuance of common stock	32,516		19,853
Cash dividends paid to stockholders	(355,182)		(338,219)
Net cash used in financing activities	(654,264)		(264,123)
Net (decrease)/increase in cash and cash equivalents	(210,777)		219,191
Cash and cash equivalents at beginning of period	397,071		202,502
Cash and cash equivalents at end of period	$	186,294	$	421,693

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	36,433	$	29,011
Income taxes	278,273		215,637

Supplemental disclosures of non-cash activities:
Non-cash accruals for property and equipment	$	75,332	$	20,359
Increase of operating lease assets and liabilities from new or modified leases	442,399		481,177
Increase of finance lease assets and liabilities from new or modified leases	—		450

The accompanying notes are an integral part of these Consolidated Financial Statements.


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TRACTOR SUPPLY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – General

Nature of Business

Founded in 1938, Tractor Supply Company (the “Company,” “Tractor Supply,” “we,” “our,” or “us”) is the largest rural lifestyle retailer in the United States (“U.S.”). The Company is focused on supplying the needs of recreational farmers, ranchers, and all those who enjoy living the rural lifestyle (which we refer to as the “Out Here” lifestyle). The Company's stores are located primarily in towns outlying major metropolitan markets and in rural communities. The Company also owns and operates Petsense, LLC (“Petsense by Tractor Supply”), a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-sized communities, and offering a variety of pet products and services. On October 12, 2022, the Company completed the acquisition of Orscheln Farm and Home, LLC (“Orscheln” or “Orscheln Farm and Home”) and converted the 81 acquired Orscheln stores to Tractor Supply stores in fiscal 2023. At September 28, 2024, the Company operated a total of 2,475 retail stores in 49 states (2,270 Tractor Supply retail stores and 205 Petsense by Tractor Supply retail stores) and also offered an expanded assortment of products through the Tractor Supply mobile application and online at TractorSupply.com and Petsense.com.

Basis of Presentation

The accompanying interim unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 30, 2023. The results of operations for our interim periods are not necessarily indicative of results for the full fiscal year.

Recently Adopted Accounting Pronouncements

In September 2022, the Financial Accounting Standard Board issued Accounting Standards Update (“ASU”) 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”. The ASU requires disclosure about an entity’s use of supplier finance programs, including the key terms of the program, amount of obligations outstanding at the end of the reporting period, and a rollforward of activity within the program during the period. The Company adopted this ASU in fiscal 2023, except for the disclosure of rollforward activity, which is effective on a prospective basis beginning within the Annual Report on Form 10-K in fiscal 2024.

Supplier Finance Program

The Company has agreements with third-party financial institutions that allow certain participating suppliers the ability to finance payment obligations from the Company. The third-party financial institutions have separate arrangements with the Company’s suppliers and provide them with the option to request early payment for invoices confirmed by the Company. The Company does not determine the terms or conditions of the arrangements between the third-parties and their suppliers and receives no compensation from the third-party financial institutions. The Company’s obligation to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangements. The Company’s outstanding payment obligations under the supplier finance program, which are included in accounts payable on the Company’s Consolidated Balance Sheets, were $65.6 million, $38.4 million, and $57.8 million at September 28, 2024, December 30, 2023, and September 30, 2023, respectively.

Sale-leaseback Transactions

In the third quarter of fiscal 2024, the Company completed its strategically planned sale-leaseback of 9 Tractor Supply store locations, resulting in proceeds of $57.1 million and a gain of $34.9 million. The Company intends to lease those properties for 20 years, with renewal options thereafter. The transactions met the accounting criteria for sale-leaseback treatment, and the resulting leases were accounted for as operating leases.


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Note 2 – Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1 - defined as observable inputs such as quoted prices in active markets;
Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, short-term credit card receivables, trade payables, debt instruments, and interest rate swaps. Due to their short-term nature, the carrying values of cash and cash equivalents, short-term credit card receivables, and trade payables approximate current fair value at each balance sheet date.

As described in further detail in Note 5 to the Consolidated Financial Statements, the Company had $1.85 billion in borrowings under its debt facilities at September 28, 2024 and $1.75 billion in borrowings under its debt facilities at December 30, 2023 and September 30, 2023. The fair value of the Company’s $150 million 3.70% Senior Notes due 2029 (the “3.70% Senior Notes”) and the borrowings under the Company’s revolving credit facility (the “Revolving Credit Facility”) were determined based on market interest rates (Level 2 inputs). The carrying value of borrowings in the 3.70% Senior Notes and the Revolving Credit Facility approximate fair value for each period reported.

The fair value of the Company’s $650 million 1.750% Senior Notes due 2030 (the “1.75% Senior Notes”) and $750 million 5.250% Senior Notes due 2033 (the “5.25% Senior Notes”) are determined based on quoted prices in active markets, which are considered Level 1 inputs. The carrying value and the fair value of the 1.75% Senior Notes and the 5.25% Senior Notes, net of discounts, were as follows (in thousands):


	September 28, 2024				December 30, 2023				September 30, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
1.75% Senior Notes	$	641,628	$	562,315	$	640,596	$	533,013	$	640,252	$	495,027
5.25% Senior Notes	$	741,613	$	781,163	$	740,880	$	769,005	$	740,636	$	708,675

The Company's interest rate swap is carried at fair value, which is determined based on the present value of expected future cash flows using forward rate curves, which is considered a Level 2 input. In accordance with hedge accounting, the gains and losses on interest rate swaps that are designated and qualify as cash flow hedges are recorded as a component of Other Comprehensive Income, net of related income taxes, and reclassified into earnings in the same income statement line and period in which the hedged transactions affect earnings. The fair value of the interest rate swap, excluding accrued interest, was as follows (in thousands):


	Fair Value Measurements at
	September 28, 2024		December 30, 2023		September 30, 2023
Interest rate swap assets (Level 2)	$	3,395	$	9,099	$	12,477

Note 3 – Share-Based Compensation

Share-based compensation includes stock options, restricted stock units, performance-based restricted share units, and transactions under the Company's Employee Stock Purchase Plan (the “ESPP”). Share-based compensation expense is recognized based on grant date fair value of all stock options, restricted stock units, and performance-based restricted share units. Share-based compensation expense is also recognized for the value of the 15% discount on shares purchased by employees as a part of the ESPP. The discount under the ESPP represents the difference between the market value on the first day of the purchase period or the market value on the purchase date, whichever is lower, and the employee’s purchase price.


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There were no significant modifications to the Company’s share-based compensation plans during the fiscal nine months ended September 28, 2024.

Share-based compensation expense was $10.0 million and $15.0 million for the third quarter of fiscal 2024 and 2023, respectively, and $35.1 million and $45.2 million for the first nine months of fiscal 2024 and 2023, respectively.

Stock Options

The following table summarizes information concerning stock option grants during the first nine months of fiscal 2024:


	Fiscal Nine Months Ended
	September 28, 2024
Stock options granted	136,299
Weighted average exercise price	$	233.85
Weighted average grant date fair value per option	$	58.63

As of September 28, 2024, total unrecognized compensation expense related to non-vested stock options was approximately $10.1 million with a remaining weighted average expense recognition period of 2.0 years.

Restricted Stock Units and Performance-Based Restricted Share Units

The following table summarizes information concerning restricted stock unit and performance-based restricted share unit grants during the first nine months of fiscal 2024:


	Fiscal Nine Months Ended
	September 28, 2024
Restricted Stock Unit Activity
Awards granted	230,789
Weighted average grant date fair value per share	$	226.94
Performance-Based Restricted Share Unit Activity
Awards granted (a)	57,364
Weighted average grant date fair value per share - awards granted	$	235.54
Performance adjustment (b)	80,723
Weighted average grant date fair value per share - performance adjustment	$	120.37

(a) Assumes 100% target level achievement of the relative performance targets.

(b) Shares adjusted for performance-based restricted share unit awards settled during the first three months of fiscal 2024 based on actual achievement of performance targets.

In the first nine months of fiscal 2024, the Company granted performance-based restricted share unit awards that are subject to the achievement of specified performance goals. The performance metrics for the units are growth in net sales and growth in earnings per diluted share and also include a relative total shareholder return modifier. The number of performance-based restricted share units presented in the foregoing table represent the shares that can be achieved at the performance metric target value. The actual number of shares that will be issued under the performance-based restricted share unit awards, which may be higher or lower than the target, will be determined by the level of achievement of the performance goals and the relative total shareholder return modifier. If the performance targets are achieved, the units will be issued based on the achievement level, inclusive of the relative total shareholder return modifier, and the grant date fair value will cliff vest in full on the third anniversary of the date of the grant, subject to continued employment.

As of September 28, 2024, total unrecognized compensation expense related to non-vested restricted stock units and non-vested performance-based restricted share units was approximately $77.1 million with a remaining weighted average expense recognition period of 2.0 years.


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Note 4 – Net Income Per Share

The Company presents both basic and diluted net income per share on the Consolidated Statements of Income. Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average diluted shares outstanding during the period. Dilutive shares are computed using the treasury stock method for share-based awards. Performance-based restricted share units are included in diluted shares only if the related performance conditions are considered satisfied as of the end of the reporting period. Net income per share is calculated as follows (in thousands, except per share amounts):


	Fiscal Three Months Ended
	September 28, 2024					September 30, 2023
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic net income per share:	$	241,470	107,167	$	2.25	$	255,001	108,774	$	2.34
Dilutive effect of share-based awards	—		511	(0.01)		—		568	(0.01)
Diluted net income per share:	$	241,470	107,678	$	2.24	$	255,001	109,342	$	2.33

	Fiscal Nine Months Ended
	September 28, 2024					September 30, 2023
	Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic net income per share:	$	864,834	107,614	$	8.04	$	859,323	109,415	$	7.85
Dilutive effect of share-based awards	—		533	(0.04)		—		640	(0.04)
Diluted net income per share:	$	864,834	108,147	$	8.00	$	859,323	110,055	$	7.81

Anti-dilutive stock awards excluded from the above calculations totaled approximately 0.1 million shares for the fiscal three months ended September 28, 2024 and approximately 0.2 million shares for the fiscal three months ended September 30, 2023. Anti-dilutive stock awards excluded from the above calculations totaled approximately 0.2 million shares for the fiscal nine months ended September 28, 2024 and approximately 0.2 million shares for the fiscal nine months ended September 30, 2023.

Note 5 – Debt

The following table summarizes the Company’s outstanding debt as of the dates indicated (in millions):


	September 28, 2024		December 30, 2023		September 30, 2023
5.25% Senior Notes	$	750.0	$	750.0	$	750.0
1.75% Senior Notes	650.0		650.0		650.0
3.70% Senior Notes (a)	150.0		150.0		150.0
Senior credit facilities:
Revolving Credit Facility	300.0		200.0		200.0
Total outstanding borrowings	1,850.0		1,750.0		1,750.0
Less: unamortized debt discounts and issuance costs	(18.8)		(21.0)		(21.7)
Total debt	1,831.2		1,729.0		1,728.3
Less: current portion of long-term debt	—		—		—
Long-term debt	$	1,831.2	$	1,729.0	$	1,728.3

Outstanding letters of credit	$	78.8	$	58.3	$	58.2

(a) Also referred to herein as the “Note Purchase Facility,” referring to the Note Purchase and Private Shelf Agreement dated as of August 14, 2017 by and among the Company, PGIM, Inc. and the noteholders party thereto, as amended through November 2, 2022, under which the notes were purchased.

Borrowings under the Company’s Revolving Credit Facility (the “2022 Senior Credit Facility”) bore interest either at the bank’s base rate (8.000% at September 28, 2024) plus an additional amount ranging from 0.000% to 0.250% (0.000% at


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September 28, 2024) or at the adjusted Secured Overnight Financing Rate (4.844% at September 28, 2024) plus an additional amount ranging from 0.750% to 1.250% (1.000% at September 28, 2024), adjusted based on the Company’s public credit ratings. The Company was also required to pay, quarterly in arrears, a commitment fee related to unused capacity on the Revolving Credit Facility ranging from 0.080% to 0.150% per annum (0.100% at September 28, 2024), adjusted based on the Company’s public credit ratings.

The Company has entered into an interest rate swap agreement in order to hedge its exposure to variable rate interest payments associated with its debt. The interest rate swap agreement will mature on March 18, 2025, and the notional amount of the agreement is fixed at $200.0 million.

Covenants and Default Provisions of the Debt Agreements

As of September 28, 2024, the 2022 Senior Credit Facility and the Note Purchase Facility (collectively, the “Debt Agreements”) required quarterly compliance with respect to two material covenants: a fixed charge coverage ratio and a leverage ratio. Both ratios are calculated on a trailing twelve-month basis at the end of each fiscal quarter. The fixed charge coverage ratio compares earnings before interest, taxes, depreciation, amortization, share-based compensation, and rent expense (“consolidated EBITDAR”) to the sum of interest paid and rental expense (excluding any straight-line rent adjustments). The fixed charge coverage ratio was required to be greater than or equal to 2.00 to 1.00 as of the last day of each fiscal quarter. The leverage ratio compares total funded debt to consolidated EBITDAR. The leverage ratio was required to be less than or equal to 4.00 to 1.00 as of the last day of each fiscal quarter. The Debt Agreements also contain certain other restrictions regarding additional subsidiary indebtedness, business operations, subsidiary guarantees, mergers, consolidations and sales of assets, transactions with subsidiaries or affiliates, and liens. As of September 28, 2024, the Company was in compliance with all debt covenants.

The Debt Agreements contain customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain ERISA events, and invalidity of loan documents. Upon certain changes of control, amounts outstanding under the Debt Agreements could become due and payable. In addition, under the Note Purchase Facility, upon an event of default or change of control, a whole payment may become due and payable.

The Note Purchase Facility also requires that, in the event the Company amends its 2022 Senior Credit Facility, or any subsequent credit facility of $100 million or greater, such that it contains covenant or default provisions that are not provided in the Note Purchase Facility or that are similar to those contained in the Note Purchase Facility but which contain percentages, amounts, formulas, or grace periods that are more restrictive than those set forth in the Note Purchase Facility or are otherwise more beneficial to the lenders thereunder, the Note Purchase Facility shall be automatically amended to include such additional or amended covenants and/or default provisions.


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Note 6 – Capital Stock and Dividends

Capital Stock

The authorized capital stock of the Company consists of common stock and preferred stock. The Company is authorized to issue 400 million shares of common stock. The Company is also authorized to issue 40 thousand shares of preferred stock, with such designations, rights and preferences as may be determined from time to time by the Company's Board of Directors.

Dividends

During the first nine months of fiscal 2024 and fiscal 2023, the Company's Board of Directors declared the following cash dividends:


Date Declared	Dividend Amount Per Share of Common Stock		Record Date	Date Paid


August 7, 2024	$	1.10	August 26, 2024	September 10, 2024
May 8, 2024	$	1.10	May 28, 2024	June 11, 2024
February 5, 2024	$	1.10	February 26, 2024	March 12, 2024

August 9, 2023	$	1.03	August 28, 2023	September 12, 2023
May 10, 2023	$	1.03	May 30, 2023	June 13, 2023
February 8, 2023	$	1.03	February 27, 2023	March 14, 2023

It is the present intention of the Company’s Board of Directors to continue to pay a quarterly cash dividend; however, the declaration and payment of future dividends will be determined by the Company’s Board of Directors in its sole discretion and will depend upon the earnings, financial condition, and capital needs of the Company, along with any other factors that the Company’s Board of Directors deem relevant.

On November 6, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $1.10 per share of the Company’s outstanding common stock. The dividend will be paid on December 10, 2024 to stockholders of record as of the close of business on November 25, 2024.

Note 7 – Treasury Stock

The Company’s Board of Directors has authorized common stock repurchases under a share repurchase program which was announced in February 2007. The total authorized amount of the program, which has been increased from time to time, is currently $6.50 billion, exclusive of any fees, commissions, or other expenses related to such repurchases. The share repurchase program does not have an expiration date. The repurchases may be made from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions. Repurchased shares are accounted for at cost and will be held in treasury for future issuance. The program may be limited, temporarily paused, or terminated at any time without prior notice. As of September 28, 2024, the Company had remaining authorization under the share repurchase program of $641.7 million, exclusive of any fees, commissions, or other expenses.


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The following table provides the number of shares repurchased, average price paid per share, and total cost of share repurchases during the fiscal three months and fiscal nine months ended September 28, 2024 and September 30, 2023, respectively (in thousands, except per share amounts):


	Fiscal Three Months Ended				Fiscal Nine Months Ended
	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Total number of shares repurchased	561		632		1,568		2,190
Average price paid per share	$	267.12	$	214.45	$	259.22	$	222.20
Total cost of share repurchases (a)	$	151,342	$	136,778	$	410,431	$	491,394

(a) Effective January 1, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock. The cost of shares repurchased may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period and excise taxes incurred on share repurchases.

Note 8 – Income Taxes

The Company’s effective income tax rate was 22.3% in the third quarter of fiscal 2024 compared to 23.0% in the third quarter of fiscal 2023. The Company’s effective income tax rate was 22.2% in the first nine months of fiscal 2024 compared to 22.6% in the first nine months of fiscal 2023. The decrease in the effective income tax rate in the third quarter and first nine months of fiscal 2024 compared to the corresponding periods in fiscal 2023 was driven primarily by a decrease in state income taxes. The decrease in the third quarter of fiscal 2024 was also driven by an increase in federal tax credits.

Note 9 – Commitments and Contingencies

Letters of Credit

At September 28, 2024, the Company had $78.8 million in outstanding letters of credit.

Litigation

The Company is involved in various litigation matters arising in the ordinary course of business. The Company believes that, based upon information currently available, any estimated loss related to such matters has been adequately provided for in accrued liabilities to the extent probable and reasonably estimable. Accordingly, the Company currently expects these matters will be resolved without material adverse effect on its consolidated financial position, results of operations, or cash flows. However, litigation and other legal matters involve an element of uncertainty. Future developments in such matters, including adverse decisions or settlements or resulting required changes to the Company's business operations, could affect our consolidated operating results when resolved in future periods or could result in liability or other amounts material to the Company's Consolidated Financial Statements.


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Note 10 – Segment Reporting

The Company has one reportable segment which is the retail sale of products that support the rural lifestyle. The following table indicates the percentage of net sales represented by each of our major product categories during the fiscal three and nine months ended September 28, 2024 and September 30, 2023:


	Fiscal Three Months Ended				Fiscal Nine Months Ended
Product Category	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Livestock, Equine & Agriculture (a)	28	%	29	%	28	%	29	%
Companion Animal (b)	25	%	26	%	24	%	25	%
Seasonal & Recreation (c)	22	%	20	%	24	%	22	%
Truck, Tool & Hardware (d)	17	%	17	%	16	%	16	%
Clothing, Gift & Décor (e)	8	%	8	%	8	%	8	%
Total	100	%	100	%	100	%	100	%

Note: Net sales by major product categories for prior periods have been reclassified to conform to the current year presentation.

(a) Includes livestock and equine feed & equipment, poultry, fencing, and sprayer & chemicals.

(b) Includes food, treats and equipment for dogs, cats, and other small animals as well as dog wellness.

(c) Includes tractor & rider, lawn & garden, bird feeding, power equipment, and other recreational products.

(d) Includes truck accessories, trailers, generators, lubricants, batteries, and hardware and tools.

(e) Includes clothing, footwear, toys, snacks, and decorative merchandise.

Note 11 – Subsequent Events

On October 24, 2024, the Company announced that it has entered into a definitive agreement to acquire Allivet, Inc., a privately held online pet pharmacy. The closing of the acquisition is conditioned on the receipt of regulatory approvals and satisfactory completion of customer closing conditions. The transaction is expected to close in Tractor Supply’s fiscal first quarter of 2025. The deal is an all-cash transaction that the Company anticipates financing through its balance sheet.


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