Tractor Supply Q3 2023 Earnings Results & Report

Tractor Supply EPS Results

• Actual EPS: $0.4660
• Consensus EPS: $0.4540
• Beat/Miss: Beat by +$0.0120
• One Year Ago EPS: N/A
• EPS Beat Rate: 4 of last 8 quarters

Tractor Supply Revenue Results

• Actual Revenue: $3.41 billion
• Expected Revenue: $3.46 billion
• Beat/Miss: Missed by -$50.28 million
• YoY Revenue Growth: N/A

Tractor Supply (NASDAQ:TSCO) (NASDAQ:TSCO) is a specialty retailer serving the needs of farmers, ranchers, hobby farmers, pet owners, gardeners and other rural lifestyle customers. The company operates under the Tractor Supply banner and focuses on products that support everyday rural living, land maintenance and animal care.

Its merchandise includes livestock and pet feed, animal health and care products, fencing, hardware, tools, power equipment, lawn and garden supplies, work clothing, footwear, automotive products and seasonal goods. Tractor Supply also offers services such as equipment repair and other conveniences designed for rural and suburban customers. Through its Petsense business, the company provides pet products and services, including supplies for dogs, cats and other companion animals.

Tractor Supply traces its origins to 1938, when it began as a mail-order business supplying tractor parts. It has since developed into one of the largest rural lifestyle retailers in the United States, serving customers through stores and digital channels across much of the country. The company is headquartered in Brentwood, Tennessee, and its operations are led by a management team focused on expanding its rural retail and pet-care businesses.

Tractor Supply Q3 2023 Earnings Call Transcript

Key Takeaways

• Adverse weather conditions including extreme heat, drought and excessive rainfall led to a drag of over one comp point in Q3, weighing on sales.
• Net sales grew 4.3% and diluted EPS rose 11% to $2.33, with gross margin expanding by 101 basis points to 36.7%.
• E-commerce sales grew in the high single digits, buy-online-deliver-from-store surged over 80%, and digital sales topped $1 billion on a trailing 12-month basis.
• Fourth-quarter comparable sales are now expected down low-to-mid single digits amidst tough year-ago weather compares, and full-year guidance was lowered to $14.5–$14.6 billion in sales with EPS of $10.00–$10.10.
• Strategic initiatives remain on track with 35% of stores in the Project Fusion format, 420+ garden center transformations, 80 new stores planned for 2024 and pilots of AI tools like HeyGura.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Tractor Supply Company's conference call to discuss third quarter 2023 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. As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Mrs. Mary Winn Pilkington, Senior Vice President of Investor and Public Relations for Tractor Supply Company. Mary Winn, please go ahead.

[Mary Winn Pilkington, Senior VP of Investor and Public Relations at Tractor Supply Company]

Thank you, operator, and good morning, everyone. Thanks for taking the time to join us today. On the call today for our prepared remarks are Hal Lawton, our CEO, and Kurt Barton, our CFO. Seth Estep, our EVP and Chief Merchandising Officer, will join us for the Q&A session. Please note that we have made a supplemental slide presentation 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.

[Mary Winn Pilkington, Senior VP of Investor and Public Relations at Tractor Supply Company]

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. Given the number of people who want to participate, we respectfully ask that you please limit yourself to one question.

[Mary Winn Pilkington, Senior VP of Investor and Public Relations at Tractor Supply Company]

If you have additional questions, please feel free to get back in the queue. I appreciate your cooperation. We will be available after the call for follow-up. Now it is my pleasure to turn the call over to Hal.

[Hal Lawton, CEO at Tractor Supply Company]

Thanks, Mary Winn, and thank you to everyone for taking the time to join us this morning. To start, I would like to express my sincere thanks and appreciation to my fellow 50,000 Tractor Supply and Petsense team members. As always, they lived our mission and values, delivered legendary service to our customers, did a great job being nimble in the quarter, and continued to deliver against our strategic initiatives. At Tractor Supply, the underlying health of our business remains strong. We continue to achieve substantial market share gains. Our customer trends and customer engagement are robust, and our Life Out Here strategic initiatives remain on track. Entering the third quarter, we had a sharp focus on the impact of the evolving macro environment and the impact of that environment on our customers' retail spending patterns. Despite this view, our quarter was more challenging than we initially expected.

[Hal Lawton, CEO at Tractor Supply Company]

The primary drivers of our underperformance were less than ideal weather conditions, as well as our customers continuing to be discerning with their spending. On the weather impact for the quarter. As we shared in our July earnings call, we anticipated that our compares would ease through the quarter as we were lapping one of the worst droughts in a decade. We were not assuming a significant benefit from the weather, but rather that it would not continue to be a drag on our performance. In fact, it was a drag. We estimate that the unfavorable weather conditions in the third quarter contributed more than one point of comp to our sales shortfall compared to our expectations.

[Hal Lawton, CEO at Tractor Supply Company]

While we never like to call out the adverse impacts of the weather on our business, there is no doubt that the challenging conditions continued to weigh on our sales this year as it relates to weather. In Q3, we had extreme heat and drought in Texoma, and to a lesser degree, the Midwest, and also we had excessive rainfall and the absence of cool weather in other areas like the Northeast. As an example, Texoma, which makes up a little over 15% of our sales, we saw extreme temperatures and dryness there for most of the quarter. In fact, in Austin, Texas, as an example, there were 44 consecutive days of temperatures over 100 degrees in the third quarter. For perspective, this was twice as many as Q3 of last year.

[Hal Lawton, CEO at Tractor Supply Company]

Additionally, last year in the third quarter, we benefited from both the emergency response from Hurricane Ian and a shift to cooler fall temperatures in the last few weeks of the quarter in some of our markets. This year, we did not have these events working in our favor. In the quarter, the emergency response from Hurricane Idalia was much smaller than the prior year, and a wave of summer-like temperatures continued into September, and in fact, even now into late October. Turning to the macro environment. As we shared last quarter, we believe that due to the cumulative effects of many factors, our customers are showing signs of strain. Examples of these factors include inflation, higher credit card balances, and the resumption of school loan payments. Additionally, consumers continue to shift their spending from goods to services, reverting back to pre-pandemic levels.

[Hal Lawton, CEO at Tractor Supply Company]

In the context of this shift, though, we believe that they remain more committed to the Out Here lifestyle and that our business is stickier than more discretionary components of retail. But nonetheless, to some degree, we've been affected by this shift. Now, turning to the numbers for the third quarter. The team delivered net sales growth of 4.3%, with a modest comparable sales decrease of 0.4%. Diluted earnings per share for the quarter were $2.33, an increase of 11% over the prior year. Now let's shift to some highlights for the quarter. Comp transactions were flat to the prior year, offset by an average ticket decline of 0.3%. The average ticket performance was driven by a decline in units per transaction, with average unit retail remaining relatively strong.

[Hal Lawton, CEO at Tractor Supply Company]

July was our best performing period of the quarter with positive comps. Both August and September comps negative, given the seasonal trends I mentioned earlier. Importantly, our active customer counts are stable and growing low single digits. Also importantly, our reactivated as well as new customer counts are also both positive and growing. E-commerce achieved sales growth in the high single digits with strong conversion performance. Our buy online, deliver from store program was up over 80%, and on a rolling 12-month basis, very notably, our digital sales have now surpassed $1 billion. Our consumable, usable, and edible products represented a meaningful portion of our business in the quarter, and these businesses continue to outperform our overall sales comp results. With continued strength in categories like dry dog food, cat food, poultry feed, lubricants, and shavings, just to name a few.

[Hal Lawton, CEO at Tractor Supply Company]

C.U.E. continues to be one of our structural advantages, and these categories and products represent the strength of our core business, and they are what drives footsteps into our store. The gains in these categories were offset by declines in our late spring, summer seasonal product and big-ticket categories, as well as softness in demand for those fall, winter product categories that usually begin to see some growth at the end of the quarter due to the unseasonably warm weather. Big-ticket performance remained under pressure, down in the mid-single digits, which was a slight improvement from the first half of the year. If I step back, overall, though, we continue to gain share across categories, online and in-store, and continue, as I said earlier, to see strong customer trends.

[Hal Lawton, CEO at Tractor Supply Company]

On the customer front, our Neighbor's Club membership base represented more than 77% of our sales for the quarter. We're seeing continued favorable trends from our loyalty members. Retention rates have never been higher, and our Neighbor's Club members continue comping at a faster rate than our overall sales performance. Importantly, our high-value customers again reached another record count in the quarter. In just over a year since launching Neighbor's Club at Petsense, penetration of sales to our members now stands at over 65%, and we continue to benefit from the cross-shopping between the two brands as we grow our share of wallet with these customers and focus on Pets Out Here in our collaboration between the two brands.

[Hal Lawton, CEO at Tractor Supply Company]

A couple of trends that I mentioned last quarter did continue into this quarter, and those are, one, customers are continually increasing their usage of credit, and two, shoppers continue to seek out value, particularly in lower-income customer cohorts. Importantly, our overall customer satisfaction scores hit another new all-time high as we continue to invest in our team, and they continue to do a fantastic job providing best-in-class customer service, a hallmark of Tractor Supply. Through the third quarter, our customer satisfaction scores have increased and experienced an improvement every week, year-over-year, since 2021. We've made significant progress in our Life Out Here strategy. We now have just over 35% of our chain, or 780 stores, that are in the Project Fusion layout, and our garden center transformation is now active in over 420 locations.

[Hal Lawton, CEO at Tractor Supply Company]

We continue to be very pleased with the strategic benefits and the financial returns of these store-level investments. Our Orscheln Farm & Home acquisition remains on track with nearly 50 stores converted to the Tractor Supply brand. During the quarter, we completed the sale of the Orscheln Store Support Center and the distribution center as planned. Year to date, we've opened 51 new Tractor Supply stores and 10 Petsense locations. Our team has done an excellent job executing our real estate projects this year and getting us back to a normalized cadence of new store openings in spite of a tough backdrop in the broader construction market. During the quarter, the real estate team also successfully executed our first sale-leaseback transaction with the sale of 10 stores. In addition, the team has about 35 fee development sites in the works.

[Hal Lawton, CEO at Tractor Supply Company]

I anticipate our real estate strategy will continue to be a source of increasing strength for Tractor Supply over the next few years. Given our performance through the third quarter and our outlook for the fourth quarter, we're updating our sales and earnings guidance for 2023, and Kurt will share some more details on our outlook later in the call. Before I hand it over to Kurt, if I just step back for a moment.

[Hal Lawton, CEO at Tractor Supply Company]

If you told me in January of 2020 that we would nearly double our top-line sales and earnings and deliver strong cash return to shareholders, while increasing our capital investment and growth initiatives, and investing in team member wages, and investing in brand building, and doing all this through a global pandemic, major disruptions in global supply chains, rapidly changing consumer shifts, also rapidly escalating costs, including the highest consumer inflation in 40 years, it would have been hard to imagine. But that's exactly what this team has delivered. Over the last four years, we've added $7 billion in incremental sales. We've grown our market share significantly, and we've increased our earnings by 115% and returned over $3.2 billion of cash to shareholders. Our resilient, needs-based business model has a proven history of growing through various economic conditions.

[Hal Lawton, CEO at Tractor Supply Company]

Our customers and team members are dedicated to the Life Out Here lifestyle, and they are, they prioritize it as it is their authentic lifestyle. Our customers over-index as homeowners, landowners, pet owners, and animal owners. We believe that the softness we're seeing is unique to transitory conditions in weather and consumer spending patterns. We continue to have long-term structural macro trends that are favorable and sustainable. As the market leader, we have substantial competitive advantages. With that, I'll now turn the call over to Kurt.

[Kurt Barton, CFO at Tractor Supply Company]

Thank you, Hal, and hello to everyone on the call. There are three key observations about our business that build on Hal's comments that I'd like to share before diving into the quarterly results. First, looking at the impact of weather. There are some years weather works to our favor and others where it clearly works against us. We've certainly tried to be transparent over the years as to the impact from the volatility related to weather, both in favorable and unfavorable events. No doubt, 2023 will be a year where weather goes down as unfavorable for our business. From a warm January, a late start to the spring that never materialized over most of our markets, to a hot and dry summer across major markets like Texoma and the Midwest, our seasonal businesses have been under pressure all year. Second, our execution continues to be strong.

[Kurt Barton, CFO at Tractor Supply Company]

Our Life Out Here initiatives are performing well and are positively impacting our results. Neighbor's Club, Project Fusion and Garden Centers, pet and digital initiatives are all driving top-line growth. Third, we view the softness in our customers' retail spending to be unique to the macro challenges in the current environment. Our customer engagement is strong, and our initiatives are driving positive results. We remain committed to investing for long-term growth, but we will be agile as we navigate the current environment. We are committed to continuing our track record of long-term value creation for our shareholders. Now, turning to our third quarter results. While our sales trends were below our expectations, the team managed the environment well, controlling what we can control. We also remain steadfast in our commitment to being the dependable supplier for Life Out Here.

[Kurt Barton, CFO at Tractor Supply Company]

Our third quarter top-line results were driven by strong and consistent comp growth, offset by below-trend seasonal performance on a weak summer demand and a lack of early fall seasonal sales. Discretionary and big ticket sales remained under pressure. Our comparable store sales growth was solid in regions such as the Southeast and the Far West. The performance of these geo regions was offset by pressure in Texoma and the Midwest, where heat and drought trends added incremental pressure on consumer demand, as well as the warm start to the fall in the northern markets. Comparable transactions were flat for the quarter, with growth in our core year-round categories being offset by reduced demand for our seasonal categories. We had a modest decline in the average comp ticket. Our average unit retail was up 3%-4%.

[Kurt Barton, CFO at Tractor Supply Company]

The benefit of the growth in our average unit retail was offset by the softness in big ticket and declines in seasonal categories, which run at a higher average ticket. Additionally, but to a lesser extent, we continue to experience softer sales in discretionary and impulse add-on items, putting pressure on the average units per transactions. Moving down our income statement. Our gross profit increased 7.3% to $1.25 billion. Gross margin increased 101 basis points to 36.7% from 35.6% in the prior year's third quarter. Gross margin was a highlight for the quarter as we continued to maintain strong product margin from our ongoing execution of Everyday Low Price strategy.

[Kurt Barton, CFO at Tractor Supply Company]

At a time when the overall promotional environment across retail has picked up modestly, our large and robust membership of Neighbor's Club offers us a great way to provide value. Our loyalty program allows us, together with our vendors, to strategically target value propositions for our customers. The gross margin rate increase was primarily attributable to lower transportation costs, driven by improvements in the global supply chain and efficiencies from our new distribution center in Ohio. Product mix pressured gross margin given the strength in C.U.E. This was somewhat offset by the margin improvement from lower big-ticket sales, which carry a lower gross margin rate. As a percent of net sales, our selling general administrative expenses, including depreciation and amortization, increased 38 basis points to 26.7%.

[Kurt Barton, CFO at Tractor Supply Company]

The increase in SG&A as a percent of net sales was primarily attributable to our planned growth investments, which included higher depreciation and amortization and the onboarding of our new DC, along with some lost fixed cost leverage due to the decline in comparable store sales. Additionally, consistent with last quarter, higher medical claims also contributed to the increase in SG&A. We have made adjustments to our benefits program and will continue to do so. We don't anticipate this to be a headwind in 2024. During the quarter, we completed the planned sale-leaseback of 10 Tractor Supply store locations, benefiting SG&A by approximately 70 basis points, net of transaction and repair costs. Additionally, the increase in SG&A was partially offset by a one-time benefit to depreciation expense of approximately 35 basis points or $11 million pre-tax.

[Kurt Barton, CFO at Tractor Supply Company]

This benefit is attributed to a change in the useful lives of assets for certain remodeled stores due to a reassessment of lease terms to better represent the economic profile of these investments. As I reflect on the SG&A performance overall, I would be remiss if I didn't mention that our operations team did a great job scaling our core variable costs to our sales performance. Our distribution center teams achieved some of the best cut times, fill rates, and overall productivity measures in years. Our store teams did a great job balancing store payroll to scale back while also maintaining the right level of customer support and driving our best-in-class customer satisfaction scores. Overall, the team had strong execution and scaled our core variable costs well in this environment.

[Kurt Barton, CFO at Tractor Supply Company]

As an example, to further illustrate, nearly 85% of our core SG&A dollar growth year-over-year represents investments in our strategic growth initiatives. My appreciation goes out to the team for controlling what we could control. For the quarter, operating profit margin was 10%, a 62 basis point improvement from the prior year. Turning now to our balance sheet. Merchandise inventories were $2.8 billion at the end of the third quarter, flat to the prior year on a per store basis. We are managing it closely and continue to be very pleased with the quality and position of our inventory. Our in-stock rates are the best they've been in over two years. In addition, our inventory shrink improved year-over-year. With strong annualized cash flows, we continue to maintain a healthy balance sheet with a leverage ratio of around 2x.

[Kurt Barton, CFO at Tractor Supply Company]

Our long-term debt has no nearing maturities and is fixed at very attractive rates. Now, let me turn to our updated fiscal 2023 financial outlook. For the year, we now anticipate net sales in the range of $14.5 billion-$14.6 billion and comp store sales even with last year. Our full year operating margin rate is expected to be in the range of 10.1%-10.2%, with net income of $1.1 billion-$1.11 billion. Diluted EPS is forecast to be $10.00-$10.10. This includes a net after-tax benefit of about $0.08 in Q4 for our remaining sale-leaseback transactions this year.

[Kurt Barton, CFO at Tractor Supply Company]

We continue to forecast anticipated capital expenditures for the year in the range of $800 million-$850 million or about $725 million-$775 million net of our capital needs for the fixed fee real estate strategy that we shared last quarter. This higher level reflects the move to own development for select new store growth that will be funded through the sale of existing stores. It's important to note that the proceeds from the sale of our own stores are expected to offset the incremental capital outlay under the development program. The combined transactions are expected to be relatively neutral to our cash position. Implied in our outlook is for fourth quarter comp store sales to be down low- to mid-single digits.

[Kurt Barton, CFO at Tractor Supply Company]

As Hal mentioned, we anticipate continued discerning consumer spending and unfavorable compares relating to weather as we experience the ongoing El Niño pattern, combined with the cycling of last year's monumental winter storm, which drove 200 basis points of favorable impact on comps. We anticipate continued strength in our core year-round categories, yet the softness and demand for seasonal and discretionary will continue to limit the top side on our performance. As a reminder, we are also lapping the 53rd week, which included an extra week of sales in the prior year, contributing approximately $225 million to top-line sales and $0.16 of diluted earnings per share. As for retail price increases, our plans reflect a continued moderation of inflation. While still positive, we believe it will be modest. Our guidance reflects ongoing gross margin expansion year-over- year.

[Kurt Barton, CFO at Tractor Supply Company]

We anticipate continued benefit from transportation and our new distribution center, along with some pressure from an unfavorable product mix. In the fourth quarter, we expect continued SG&A deleverage, given our investments and the expected comparable store sales declines. As we shared last quarter, for modeling purposes, the Orscheln stores will go into our comp calculation in 2024 based on when the store is converted to our point of sale system. Most stores converted to our point of sale during Q2 and Q3 of this year. As is customary, we will provide our guidance for 2024 at our fourth quarter earnings call. We're still finalizing our outlook for sales as there are a number of puts and takes to be considered. Let's start with the fact that we're a needs-based, demand-driven business with a long history of positive comps.

[Kurt Barton, CFO at Tractor Supply Company]

Additionally, as we see 2024 today, we expect we'll have less benefit from inflation. But we're 18 months into cycling big-ticket softness, and the weather, hopefully, cannot be worse than it was this year. But we do anticipate that the operating environment will continue to be challenging, with a higher than normal degree of uncertainty and ongoing pressure on consumer confidence and household budgets. As we've shared over the last couple of years, we've always planned that 2023 would be our peak capital investment level. With that as a backdrop, we plan to prudently invest in our strategic priorities in 2024, with next year's net capital spending in the $600 million, which will relieve some depreciation expense. We remain excited about the progress on our Life Out Here strategy and are very pleased with our initiatives.

[Kurt Barton, CFO at Tractor Supply Company]

Our tenth distribution center will open during the second quarter of 2024. Much like our distribution center opening this year, this new DC benefits gross margin, but will pressure our SG&A as the facility ramps up. The gross margin benefits typically lag the opening by about one quarter. Similar to 2023, we anticipate executing approximately 15 existing store sale-leaseback transactions in 2024 to fund the own development new store program. And we anticipate the opening of 80 new Tractor Supply stores and 10-15 PetSense locations. Over our history, we have continually adapted to the operating environment around us. The needs-based, demand-driven characteristics of our product offerings support our ability to continue to be a winner in retail. We will remain agile and play offense.

[Kurt Barton, CFO at Tractor Supply Company]

We will leverage our core competencies that have served us well, all while strengthening our capabilities and investing in our Life Out Here growth strategy. Now, I will turn the call over to Hal to wrap us up.

[Hal Lawton, CEO at Tractor Supply Company]

Thanks, Kurt. As the calendar shifts to the fall and winter season, our stores and online are ready for the change in typical Tractor Supply fashion. Our merchandising team has been working closely with our vendors on plans for the holiday season, with an emphasis on new products and innovation, and very notably, with a focus on value. As the largest player in our sector, it is our obligation to be the advocate for value for our customers, and we are working hard to roll back the cost absorbed over the past two years. We will continue to be the destination for value and quality across our merchandising lineup. In key categories like heating and insulated apparel, our merchants have brought newness with compelling values, including exciting programs such as Columbia Performance Hunting Gear and our line of Grand Teton Pellet Stoves.

[Hal Lawton, CEO at Tractor Supply Company]

In our C.U.E. categories, we have the right selection at the right price, with a focus on value, and are committed to being in stock as we continue to support our customers' lifestyles. For example, you will see wood pallet stackouts in the majority of our stores in preparation for the winter season. Right now, our 400+ Garden Centers are showcasing pumpkins, mums, and fall harvest decor. This year, we expanded our Halloween and harvest decor program with a great lineup to capitalize on our customers' love for decorating their homes with on-trend, seasonal, indoor and outdoor decor, including a skeleton cow that was a TikTok viral sensation.

[Hal Lawton, CEO at Tractor Supply Company]

Additionally, and particularly in light of the continued warmer weather, we continue to be the destination for our customers' sporting goods, outdoor recreation, and outdoor wildlife interest, with products like our exclusive Royal Wing bird feed, Cannon gun safe, exclusive CountyLine log splitters, and the Blackstone griddle. Earlier this week, we announced the addition of YETI products to our lineup in our Fusion stores. We're especially excited to collaborate with a well-regarded brand like YETI that brings a long-standing reputation for quality and durability, and aligns with our customers' interest in camping, fishing, hunting, and all outdoor activities. Our stores and garden centers will soon be filled with Christmas trees, wreaths, and poinsettias. In addition to live goods, our customers can look forward to unique and different decor items, including our popular six-foot chicken lawn decorations and farm-themed holiday gingerbread kits.

[Hal Lawton, CEO at Tractor Supply Company]

When it comes to gifts, we have compelling values and buys in every selection of our store, from tools and grills to even fun, rural, unique items like a 12-volt, zero-turn, ride-on toy lawnmower. From a calendar perspective, it's a good setup this year, with 31 days between Thanksgiving and Christmas. Christmas falls on a Monday, so we anticipate a strong full weekend of sales prior to Christmas. We have a strong holiday season playbook with an exciting day after Thanksgiving Day plan as well, with compelling offers programmed throughout the season. As we plan for the season, though, we acknowledge there's a broader range of estimates for holiday consumer spending than we've seen over the last couple of years. As we enter the fourth quarter, we're on track to achieve several milestones in our Life Out Here strategy.

[Hal Lawton, CEO at Tractor Supply Company]

Notably, we anticipate ending the year with 40% of our store base in the Project Fusion format and nearly 500 Garden Centers, both significant milestones to initiatives that we began less than three years ago. Our real estate pipeline is robust, with plans for 80 new Tractor Supply stores also in 2024. We're piloting artificial intelligence in many functions in the business, including marketing, supply chain, and technology development. And one particular application that I'm very excited about is our generative AI knowledge tool that we call Hey GURA.

[Kurt Barton, CFO at Tractor Supply Company]

Using a proprietary AI engine that we built, we're able to deliver knowledge directly to our team members through the headsets that they each wear to augment their individual experience. Let me give you an example of this. One of the questions recently asked by a team member is: When do you switch from crumble feed to pellet for baby chicks? When asked, the Hey GURA app responded, "Typically, chickens switch from crumble to pellet feed when they reach about 15 weeks-18 weeks of age, depending on breed and development." To date, the results have been excellent. Our team members are really embracing and excited about the technology, and it's been a great value-add feature for our leading customer service. We have a long track record of growth and high expectations of performance. We view our current trends to these expectations as transitory and specific to the economic environment.

[Kurt Barton, CFO at Tractor Supply Company]

This team is dialed in and understands the challenges. As we're entering one of the busiest periods in retail, my thanks and sincere appreciation goes out to my fellow 50,000 Tractor Supply team members for their dedication to our mission and values. With that, operator, we would now like to open the lines for questions.

[Operator]

We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. We ask that all participants limit to one question and one follow-up, after which you may rejoin the queue. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Scot Ciccarelli with Truist. Your line is now open.

[Scot Ciccarelli, Managing Director and Senior Equity Research Analyst at Truist]

Good morning, guys. Thanks for the questions. Scot Ciccarelli. Given the decline in same-SKU inflation and growing concerns, we may see a deflationary environment in pet food and feed. Can you help us understand, at least generally, how you're thinking about the impact of inflation or deflation for 2024, especially in your C.U.E. categories?

[Kurt Barton, CFO at Tractor Supply Company]

Hey, Scot, this is Kurt, and good morning. First, let me just start by saying we still see an environment where there's some net inflation year-over-year, while modest. Inflation is clearly slowing, but not turning to deflation at this point. And specific to some of the categories, we are seeing there's areas this year where there's year-over-year deflation, particularly like areas like bird feed, livestock feed, corn-based. Yeah, there's some level of deflation, but there's areas, like you mentioned, where we're still seeing some level of inflation still in the system, such as pet food. And then there's most of our areas in our product categories, what I describe as they've hit a plateau, it's stable, and we're running pretty consistent.

[Kurt Barton, CFO at Tractor Supply Company]

As that moves through the pipeline, very much consistent with our outlook for this year and beyond, was that we start to moderate down to a low single-digit level of inflation in 2023. Too early to really say for 2024, but, you know, the general call would be that things begin to stabilize. Inflation, deflation is not as much of a factor in the average ticket that it's been over the past few years, and it's more, you know, more stabilized and neutral-ish, and, you know, we're certainly focused on it. This team works consistently in environments of change in inflation, deflation, have a history of performing very well. Know that we're monitoring it.

[Kurt Barton, CFO at Tractor Supply Company]

I'll be able to share more information on that in the fourth quarter call when we give our outlook for 2024.

[Scot Ciccarelli, Managing Director and Senior Equity Research Analyst at Truist]

That's really helpful. And then just for clarification, if we were to get same-SKU deflation, should we expect it to result in gross margin expansion? I think that used to be a general rule of thumb for you guys as we go back to pre-pandemic days. Thanks.

[Kurt Barton, CFO at Tractor Supply Company]

Yes. In general, our history has been that in a deflationary environment, we're able to leverage our scale, manage our retail pricing. It generally produces a benefit on the rate, just like inflation did over the last few years, put a bit of pressure on that rate, and we manage both, both environments, very well, and historically, it's been as you described it.

[Scot Ciccarelli, Managing Director and Senior Equity Research Analyst at Truist]

Very helpful. Thanks.

[Operator]

Thank you. The next question comes from the line of Steven Forbes with Guggenheim Partners. Your line is now open.

[Steven Forbes, Senior Managing Director of Equity Research at Guggenheim Partners]

Good morning, Hal, Kurt, Seth. Maybe, maybe just a focus on capital spending plans for next year. I think you guys mentioned sort of in the $600 million range, but was curious, Kurt, if you can maybe help us explain the year-over-year change, and if there's any part of the strategic investment plan that you're pulling back on for any particular reason?

[Kurt Barton, CFO at Tractor Supply Company]

Yeah. Hey, Steven. The biggest change, very much consistent with what we expect, and we said peak years of 2022 and 2023, are those big investments in the distribution centers. We will open that second new distribution center next year in 2024, but a majority of that capital is in 2023. So on a net capital spend that we're forecasting in the $725-$775, if you back off of that into the 600s, the biggest majority of that is supply chain. There's other efficiencies in there, such as we continue on our investments in the stores, such as Fusion and Garden Centers, to reengineer and find efficiencies in our investments.

[Kurt Barton, CFO at Tractor Supply Company]

Really excited about the two newest formats that we are rolling out in the stores that we've been able to reengineer and drive cost out of a garden center, and that's giving us even lower cost that. And then maybe the third thing would be the investments we made in 2023 on integration and remodeling the Orscheln stores. We'll be rolling off of that. I think those three things are the biggest difference, but no shift in our strategic investments.

[Steven Forbes, Senior Managing Director of Equity Research at Guggenheim Partners]

Thank you.

[Operator]

Thank you. The next question comes from the line of Peter Benedict with Baird. Your line is now open.

[Peter Benedict, Managing Director of Equity Research at Baird]

Oh, hey, guys. Thanks. Just, currently just leveraging off, Steve's question there, you know, the prudent investment, approach on the CapEx side. Can you maybe, walk that over to the SG&A side of the P&L and talk about, what it kind of means? You've spoken to, 85% of the growth in SG&A coming from some of these investments. How does that kind of, maybe that growth cadence, inflect next year? And then secondly, your ability to kind of manage the, the core bucket, I guess, the non-investment related bucket, in the event that, you know, your comps remain, challenged, let's say, through 2024. Let's just call it flat for argument's sake. Thank you.

[Kurt Barton, CFO at Tractor Supply Company]

Yeah, Peter, on SG&A, as I mentioned in my prepared remarks, I felt one of the highlights was how the team managed pivoting off of a number of years and quarters with strong top-line sales to scale to the appropriate level of volume for Q3. And it just shows our ability to be agile in that case. To your point on the 85% was growth, some of the things that really played out to help drive the core SG&A to a really low growth level. First area, supply chain, and I mentioned this in the previous last couple of quarters. We had built the supply chain almost through muscle, 3PLs, other areas that distribution centers were running at max capacity or above that level and that was inefficient.

[Kurt Barton, CFO at Tractor Supply Company]

We've been able to shed off some of the 3PL higher costs. We've, the team is running at some of the highest level of productivity. So our one of our biggest areas of leverage in a flat to slight negative comp sales environment was our distribution supply chain, as they actually leveraged as a percent of sales because of productivity. John and team focusing on scaling down task or non-customer service work to modestly drive hours down, that also reflects, you know, some of the SG&A benefits. In general, in an environment that there is softer demand at Tractor Supply, as we look ahead to even future quarters and next year, we'll plan and scale our core levels of investments and our operating expenses in line with our sales growth.

[Kurt Barton, CFO at Tractor Supply Company]

Then from there, this team will continue to clawback inflationary pressures, even in operating expenses that have embedded over the last few years. This is a team that's been built with lean management, continuous improvement in our DNA, and we have profit improvement goals, and those are all things as we plan ahead to 2024, that gives us confidence in our ability to manage and still hold to our long-term algorithm and targets on operating margin.

[Peter Benedict, Managing Director of Equity Research at Baird]

Thank you very much.

[Operator]

Thank you. The next question comes from the line of Michael Baker with D.A. Davidson. Your line is now open.

[Michael Baker, Managing Director and Senior Research Analyst at D.A. Davidson]

Excuse me. Thanks. Two-part question, I guess. I want to ask about your discretionary and seasonal business. You talked about your discretionary business being 15% of sales, but why wouldn't you consider the seasonal business to be discretionary as well, as that you know seems to be able to ebb and flow based on the seasons? And I guess the second part of that is, you said the fall/early winter business has started off slow. Are those lost sales or just delayed? Like, if it does eventually get cold, which presumably it will, how do you think those sales pick back up?

[Hal Lawton, CEO at Tractor Supply Company]

Yeah. Hey, Michael, good morning. Thanks for the question. Appreciate your participation in the call. You know, as it relates to discretionary, just one would acknowledge, 15-ish% of our business, kind of big-ticket discretionary, mid-single-digit negative comps, a slight improvement from sequentially from what we saw in the first half of the year, kind of in line with what we expected. The myth throughout the entirety of this year for us has been our seasonal businesses. Our C.U.E. business continues to perform very strong, you know, with comps well above our reported total company comp performance, with significant share gains happening in our C.U.E. business.

[Hal Lawton, CEO at Tractor Supply Company]

You know, on our Q2 call, or Q1 and Q2 calls, when we talked about seasonal, we acknowledged that there could be, you know, an element of the consumer spending discretionary piece that kind of seeps into that seasonal business.

[Hal Lawton, CEO at Tractor Supply Company]

You know, I would characterize the fall and winter business, though, more demand-driven, needs-based than even spring, because in the winter, the businesses that are really strong for us and large and robust are things like wood pellets and propane. In fact, three of our top 10 SKUs during the winter season are those, are two wood pellet SKUs and the propane SKU. Those are demand-driven, needs-based. When it's cold, people, you know, are burning the pellets in their wood stoves, or they're using propane for heating of their homes or supplemental heating. And when it's not cold, they're not. And this time last year, as actually, as we entered Q3, the last week of Q2, and as we entered Q3, you know, we had cooler weather, and then that continued throughout the balance of Q3.

[Hal Lawton, CEO at Tractor Supply Company]

We didn't, you know, have that at all this year. And then, even as we're heading into Q4 here, it's gonna be 80 degrees this weekend in Boston. You just don't need wood pellets, and you don't need propane during that time. And so you can see it very clearly in our business. On the flip side, we are seeing strength in outdoor projects, outdoor wildlife, those sorts of categories, whether it's grilling, whether it's deer corn in the deer hunting season, you can certainly see it in the lawn and garden categories, even in riding lawn mowers. Those businesses this time of year, though, are just not large enough to offset, even with nice growth in those categories. They're just not large enough to offset those sorts of pieces that are demand-driven.

[Hal Lawton, CEO at Tractor Supply Company]

We also do sell a lot of insulated outerwear-type categories, whether it's coats and you know fleece-lined pants and those sorts of things, gloves, boots. I think you know as it gets cold, I would expect those to not be lost sales, but there is an element of like wood pellets and propane that once you don't have that cold weather you know you do lose it. I think we are being prudent in our implied guidance for the fourth quarter. Last year, you know, we didn't have it was a warmish November, so there...

[Hal Lawton, CEO at Tractor Supply Company]

Last year, you know, we didn't have it was a warmish November, so there, but we know there's an El Niño that's in forecast right now, and so we just thought it'd be prudent to not assume that, you know, we'd have any upside as we lap that in November, as we talked about in our prepared remarks. And then, of course, we're hurdling, we're comping on top of a robust storm from last year that, as we noted in our Q4 earnings call last year, contributed two points of comp to the quarter.

[Michael Baker, Managing Director and Senior Research Analyst at D.A. Davidson]

Excuse me. Thanks. That's helpful. So it sounds like those seasonal categories are nondiscretionary, but only if the weather cooperates. Is that a fair way to put it?

[Hal Lawton, CEO at Tractor Supply Company]

Yeah, I think that's a fair wa, that's an absolutely fair way to say it.

[Michael Baker, Managing Director and Senior Research Analyst at D.A. Davidson]

Excellent. I appreciate the time. Thank you.

[Operator]

Thank you. The next question comes from the line of Michael Lasser with UBS. Your line is now open.

[Michael Lasser, Managing Director and Senior Equity Research Analyst at UBS]

Good morning. Thank you so much for taking my question. One of the debates on the Tractor Supply story over the long term is, the company has a gross margin right now that's 150 basis points. That's higher than it was prior to the pandemic. So what gives you confidence on the long-term outlook, especially as this has become a more profitable business? What gives- what's a realistic expectation that you can hold on to this increased profitability? And then I have one quick follow-up.

[Kurt Barton, CFO at Tractor Supply Company]

Yeah, Michael, this is Kurt. Gross margin has certainly been not only a high point for this quarter, this year, but to your point, what we've been able to accomplish, leveraging our scale and size in the last years has been a real testament to the team. I'll give you a few examples of why we believe this is a sustainable gross margin, and most of it is around the structural nature of it. As you think ahead, I'll first acknowledge, as we continue to grow in C.U.E and take market share, it puts a little bit of pressure from product mix. And we've been cycling and absorbing those gross margin expansions with higher pressure from C.U.E. mix in the past few years, more than we would see going forward.

[Kurt Barton, CFO at Tractor Supply Company]

Supply chain benefits have really been one of the top two areas of gross margin expansion, and we've seen and come off some of the highest supply chain costs. We've absorbed some of the inefficiencies in the robust, fast growth period. So the supply chain costs, declining transportation costs, improvement in the reduced miles from new distribution centers, are all structural. And as you think about transportation costs, you think about it as, in this particular time, we are still in an environment where transportation costs, both domestic and import, are higher than the pre-pandemic levels. I'm not saying that we expect to revert back to pre-pandemic norms, but I think the important thing is that we're not coming off of a new extreme low, but yet coming off of some of the highs.

[Kurt Barton, CFO at Tractor Supply Company]

And then the second most impactful piece of gross margin is the structural sustained difference of coming off promotionals that were embedded into our normal programs and really leveraging EDLP and Neighbor's Club. So the biggest drivers are structural. We expect to be able to change those. And you know, the benefit that our FAST team has driven in our production, not only in sales, but the funding from our vendors is structurally in there as well. So we can anticipate to be able to have continued gross margin expansion. And even next year, as you think about seasonal, may be able to bounce back, and that has higher margins. So we have a lot of expectations on our ability to sustain and even expand gross margin for those reasons.

[Michael Lasser, Managing Director and Senior Equity Research Analyst at UBS]

Got you. My follow-up question is, you provided some initial observations on next year. Macro is gonna be tough. We'll see what happens with the weather, less inflation benefit. So in light of all those comments, how low can your comp be, and you still maintain flat overall EPS next year versus this year?

[Kurt Barton, CFO at Tractor Supply Company]

Yeah. I'll take that one. I mean, I'd have to just go to, this is still very early in our planning cycle. This business has been resilient in regards to our ability to maintain our comp sales. It's so much of a needs-based core business in there, that we are planning for some uncertainty. There are some headwinds on the consumer, but we got strong strategic initiatives. We're lapping some difficult challenges from the seasonal business. And we can be nimble, but I'm just not gonna try to predict or go down a path of, like, what level of comps or how low it could be, because this business has a track record. In 30 years, we've had one year of negative comps, and it was ever so slightly.

[Kurt Barton, CFO at Tractor Supply Company]

We're confident in our ability to produce, you know, strong sales performance.

[Hal Lawton, CEO at Tractor Supply Company]

And then the only thing I would add is-

[Michael Lasser, Managing Director and Senior Equity Research Analyst at UBS]

Thank you very much, and, yeah.

[Hal Lawton, CEO at Tractor Supply Company]

Hey, Michael, the only thing I would add is, you know, Kurt in Kurt's prepared remarks, talks about our commitment to our long-term operating margin guidance, inclusive of next year. I'd also add, we see a lot of opportunities for continued operating expense control next year, namely, as Kurt mentioned, freight and a number of other levers. And I think we've demonstrated this year that we have a number of levers that we can pull to continue to support the underlying profitability of the business and also can control what we can control. And we certainly don't see an outlook next year, as you implied, as potential for, you know, negative decline in EPS.

[Hal Lawton, CEO at Tractor Supply Company]

If you look at the underlying strength of our business, whether it's in consumer, our shopper, number of shoppers in our stores, our customer satisfaction, our market share gains, all those sorts of things, you know, we've never been more confident in the underlying foundation of our business.

[Michael Lasser, Managing Director and Senior Equity Research Analyst at UBS]

Thank you so much.

[Operator]

Thank you. The next question comes from the line of Oliver Wintermantel with Evercore. Your line is now open.

[Oliver Wintermantel, Managing Director at Evercore]

Yeah, thanks. I was looking for your guidance for the fourth quarter comp, the low single digits to mid-single digit decline. Kurt, how do you expect transactions versus ticket outperforming in that kind of environment, in regards of last year's the winter storm? And is it mostly in transactions that is gonna decline in the fourth quarter?

[Kurt Barton, CFO at Tractor Supply Company]

Oliver, yeah. It—I'd frame it up as it's gonna be a mix of both of those. We had, you know, a slight average ticket decline in Q3. Some of those pressures on average ticket will, we expect to persist into Q4. But transactions are what gets impacted and did, you know, get impacted by the monumental winter storm last year. With our expectations, as we mentioned, this is not framing up to be an ideal fourth quarter weather. That demand would play out in transactions. And in our evaluation, it's gonna be a mix of both transactions and ticket, and implied in our guidance would be a negative, you know, comp transaction for that reason.

[Oliver Wintermantel, Managing Director at Evercore]

Okay. Thanks very much. Good luck.

[Operator]

Thank you. The next question comes from the line of Scott Mushkin with R5 Capital. Your line is now open.

[Ryann Mushkin, Research & Consulting Senior Associate at R5 Capital]

Good morning, this is Ryann on for Scott. Thanks for taking our question. Our research would suggest that there is an opportunity to have stores get deliveries from the distribution centers more frequently. Do you agree? And if so, what do you think the sales opportunity may be? Thanks.

[Hal Lawton, CEO at Tractor Supply Company]

Good morning, and thank you for your question. First off, I'd say this is an area that we have been focused on for the last few years. We've gone from roughly five mixing centers to 15 mixing centers over the last three years. That has given us the ability to have more replenishment going into the stores of full pallet quantities of our big moving SKUs. The second thing is the expansion of our DCs from eight to nine, and then next year, 10, also gives us additional outbound capacity to be able to deliver more frequently to our stores. We now have over, I think it's 500 or 600 stores now that receive shipments twice a week from our distribution centers.

[Hal Lawton, CEO at Tractor Supply Company]

The remaining stores all receive shipments once a week, so we, you know, it's not that we have stores receiving it less than that. But yeah, we, you know, we're constantly looking at ways we can. What I would leave you with is our in-stock rate right now is the best it's been, as Kurt said in his prepared remarks, really since the pandemic began. And we feel very good about our in-stock rates right now, and our team's done an excellent job, I think, managing inventory. If you look at our inventory growth, it's in control. If you look at our in-stock rates, they're excellent. You look at our shrink numbers, you know, below last year, and that last year was below two years ago.

[Hal Lawton, CEO at Tractor Supply Company]

So I think on all sides of inventory, quality, quantity, in-stock rates, we feel, we feel very good. But continue to challenge ourselves to, you know, increase frequency and get smarter and smarter in our tools, like our new RELEX replenishment and allocation system, to be able to, you know, keep improving our performance on inventory. But feel very good about it. As I said, our in-stock rates are the best they've been really since the pandemic.

[Ryann Mushkin, Research & Consulting Senior Associate at R5 Capital]

Thanks so much.

[Operator]

Thank you. The next question comes from the line of Chris Horvers with JPMorgan. Your line is now open.

[Chris Horvers, Managing Director and Senior Equity Research Analyst at JPMorgan]

Thanks very much. So, following up on some of the prior questions, you are assuming comps are down roughly 4% in the fourth quarter, and you also said that your business has a long history of being positive comps, sort of alluding that 2024 would be positive. So I guess, what's unique to the fourth quarter? I understand there's two points of, you know, weather lap year-over-year. Why wouldn't the business be positive in that quarter if weather is sort of the only variable that's been the unknown?

[Hal Lawton, CEO at Tractor Supply Company]

Hey, good morning, Chris, thanks for your question, participation in the call. You know, I would just reiterate what we said in our prepared remarks, that we continue to see the consumer being discerning in their spend, particularly in discretionary. I mean, I think we're all, we've all seen the charts on PCE spend and the shift from goods to services. We've all been looked at how goods spending is occurring and how that's shifting across the various retail sectors. The sector we play in is the most sticky, the least impacted by that. You go look at electronics and appliances, you look at furniture, you look at home improvement, you look at all the other categories, they're all performing well below kind of our normal, our sector.

[Hal Lawton, CEO at Tractor Supply Company]

But nonetheless, you know, we are seeing some modest impact from the discerning spend. We also said, you know, weather's not off to a great start for us in Q4. There's a very strong El Niño pattern occurring. That typically is a warmer winter season. It's 80 degrees this weekend in Boston. And then, as you said, we're lapping the strong storm from last year, which we, you know, accorded two points to. So we just think you put all that together, and it's prudent to be, it's appropriate to be prudent in our outlook for the fourth quarter and in that kind of mid-single digit, low- to mid-single digit comp negative. And, you know, don't think it's indicative of anything structural in the business.

[Hal Lawton, CEO at Tractor Supply Company]

You know, we see it as very transitory to the current moment. And, you know, as I said, in my prepared remarks, we've had, we had active customer growth in Q3, we had new customer growth in Q3, we had reactivated customer growth in Q3. Our customer satisfaction scores are at all-time highs. Our market share gains are very strong right now across the board. You know, in past, this past quarter, our shares, share gains are as strong as they've been since the pandemic. And again, our underlying business is very strong. I'm confident that in the context of retail goods spending, you know, we're, when even though the tide is shifting out for all, that we're gonna be, you know, standing tall amongst that.

[Chris Horvers, Managing Director and Senior Equity Research Analyst at JPMorgan]

Got it. And then my follow-up is just, you know, on the consumer broadly, it is a needs-based business. How is, how is the consumer changing? Because I think if you look across retail right now, you're not the only one who is seeing weakness, and it, and it seems like it has deteriorated a bit. So, you know, are some of the things that you're talking about in terms of units per transaction and the usage of credit, is your view that there has been some, some degree of deterioration in the consumer over the past, you know, six months or so?

[Hal Lawton, CEO at Tractor Supply Company]

You know, I'd start by saying, what is our value proposition? And our value proposition is to be that dependable supplier for Life Out Here. And again, I'd reiterate, we're seeing the customers in our stores. They are shopping us and at, you know, record levels. That said, when they're shopping us, they are spending, you know, a little bit less items per basket, right? Kind of to the tune of a low single-digit headwind, and they're pulling back a little bit on discretionary. Those are consistent themes that we've had really for the last few quarters. We haven't really seen any acceleration in that. It's really been more of a consistent theme. But again, for us, the seasonal businesses have been a huge departure from what our outlook and expectations have been all year long.

[Hal Lawton, CEO at Tractor Supply Company]

But nonetheless, I, you know, I think you're gonna continue to see, for the near term, consumers continuing and the consumer spend continuing to shift to services from goods and kind of rebalancing. And I think you're gonna see discretionary retail businesses continuing to take the brunt of that as we turn the quarter this year into next year.

[Chris Horvers, Managing Director and Senior Equity Research Analyst at JPMorgan]

Got it. Thanks very much.

[Mary Winn Pilkington, Senior VP of Investor and Public Relations at Tractor Supply Company]

As we've hit the top of the hour.

[Operator]

Thank you.

[Mary Winn Pilkington, Senior VP of Investor and Public Relations at Tractor Supply Company]

Alyssa, as we've hit the top of the hour, I think this wraps up our call. So, thank you, everyone, for joining us, and I'm available for follow-up, and we'll look forward to speaking to you on our fourth quarter earnings call.

[Operator]

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.

Participants

Executives

• Hal Lawton, CEO
• Kurt Barton, CFO
• Mary Winn Pilkington, Senior VP of Investor and Public Relations

Analysts

• Chris Horvers, Managing Director and Senior Equity Research Analyst at JPMorgan
• Michael Baker, Managing Director and Senior Research Analyst at D.A. Davidson
• Michael Lasser, Managing Director and Senior Equity Research Analyst at UBS
• Oliver Wintermantel, Managing Director at Evercore
• Peter Benedict, Managing Director of Equity Research at Baird
• Ryann Mushkin, Research & Consulting Senior Associate at R5 Capital
• Scot Ciccarelli, Managing Director and Senior Equity Research Analyst at Truist
• Steven Forbes, Senior Managing Director of Equity Research at Guggenheim Partners