UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended			~~September 25, 2021~~March 26, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from						to

Commission file number 000-23314

TRACTOR SUPPLY COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Delaware

13-3139732

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

5401 Virginia Way, Brentwood, Tennessee 37027

(Address of Principal Executive Offices and Zip Code)

(615) 440-4000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.008 par value

TSCO

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.


Class						Outstanding at ~~October~~April 23, ~~2021~~2022
Common Stock, $0.008 par value						~~113,814,924~~111,881,628

TRACTOR SUPPLY COMPANY

INDEX


		Page No.

PART I.	Financial Information	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (unaudited) – S e ~~ptember~~March 26, 2022, December 25, 2021 2 5 ,and March 27, 2021 ~~December 26, 2020, and~~ ~~September~~ 2 6 ~~, 2020~~	3
	Condensed Consolidated Statements of Income (unaudited) – For the Fiscal Three ~~and~~ ~~Nine~~Months Ended S e ~~ptember~~ 2 5 ,March 26, 2022 and March 27, 2021 ~~and~~ S e ~~ptember~~ 2 6 ~~, 2020~~	4
	Condensed Consolidated Statements of Comprehensive Income (unaudited) – For the Fiscal Three ~~and~~ N i ne Months Ended S e ~~ptember~~ 2 5 ,March 26, 2022 and March 27, 2021 ~~and~~ S e ~~ptember~~ 2 6 ~~, 2020~~	5
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – For the Fiscal Three ~~andNine~~Months Ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~	6
	Condensed Consolidated Statements of Cash Flows (unaudited) – For the Fiscal N i ne Three Months Ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~	87
	Notes to Unaudited Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1814
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2923
Item 4.	Controls and Procedures	2923

PART II.	Other Information	3024
Item 1.	Legal Proceedings	3024
Item 1A.	Risk Factors	3024
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3024
Item 3.	Defaults Upon Senior Securities	3024
Item 4.	Mine Safety Disclosures	3024
Item 5.	Other Information	3025
Item 6.	Exhibits	3126
Signature		3227

Page 2

Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(Unaudited)


		September 25, 2021		December 26, 2020		September 26, 2020			March 26, 2022		December 25, 2021		March 27, 2021
ASSETS	ASSETS							ASSETS
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,111,711	$	1,341,756	$	1,111,986	Cash and cash equivalents	$	405,432	$	878,030	$	1,149,930

Inventories	Inventories	2,199,773		1,783,270		1,915,040		Inventories	2,568,179		2,191,192		2,084,677
Prepaid expenses and other current assets	Prepaid expenses and other current assets	149,550		133,659		136,098		Prepaid expenses and other current assets	185,634		164,118		146,227
Income taxes receivable	Income taxes receivable	6,827		—		7,838		Income taxes receivable	9,030		17,100		—
Total current assets	Total current assets	3,467,861		3,258,685		3,170,962		Total current assets	3,168,275		3,250,440		3,380,834

Property and equipment, net	Property and equipment, net	1,441,704		1,248,960		1,178,625		Property and equipment, net	1,655,750		1,617,806		1,287,004
Operating lease right-of-use assets	Operating lease right-of-use assets	2,725,510		2,423,881		2,354,196		Operating lease right-of-use assets	2,744,095		2,785,858		2,589,418
Goodwill and other intangible assets	Goodwill and other intangible assets	55,520		55,520		124,492		Goodwill and other intangible assets	55,520		55,520		55,520
Deferred income taxes	Deferred income taxes	16,590		31,586		3,581		Deferred income taxes	—		2,437		11,428
Other assets	Other assets	38,009		30,484		28,941		Other assets	63,168		55,406		35,475
Total assets	Total assets	$	7,745,194	$	7,049,116	$	6,860,797	Total assets	$	7,686,808	$	7,767,467	$	7,359,679

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:							Current liabilities:
Accounts payable	Accounts payable	$	1,197,813	$	976,096	$	1,056,911	Accounts payable	$	1,341,645	$	1,155,630	$	1,181,924
Accrued employee compensation	Accrued employee compensation	122,007		119,701		120,361		Accrued employee compensation	49,124		109,618		68,102
Other accrued expenses	Other accrued expenses	408,887		324,813		274,244		Other accrued expenses	445,079		474,412		377,777
Current portion of long-term debt		—		—		380,000

Current portion of finance lease liabilities	Current portion of finance lease liabilities	4,242		4,554		4,407		Current portion of finance lease liabilities	4,042		3,897		4,674
Current portion of operating lease liabilities	Current portion of operating lease liabilities	312,296		298,696		294,826		Current portion of operating lease liabilities	359,774		321,285		303,222
Income taxes payable	Income taxes payable	762		19,938		1,914		Income taxes payable	—		—		40,226

Total current liabilities	Total current liabilities	2,046,007		1,743,798		2,132,663		Total current liabilities	2,199,664		2,064,842		1,975,925

Long-term debt	Long-term debt	985,867		984,324		529,264		Long-term debt	986,896		986,382		984,838
Finance lease liabilities, less current portion	Finance lease liabilities, less current portion	30,041		33,096		32,948		Finance lease liabilities, less current portion	36,649		32,848		31,890
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	2,536,875		2,220,904		2,171,773		Operating lease liabilities, less current portion	2,529,605		2,574,882		2,399,246

Deferred income taxes								Deferred income taxes	37,487		—		—

Other long-term liabilities	Other long-term liabilities	125,651		143,154		118,283		Other long-term liabilities	106,485		105,848		115,481
Total liabilities	Total liabilities	5,724,441		5,125,276		4,984,931		Total liabilities	5,896,786		5,764,802		5,507,380

Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:
Preferred stock	Preferred stock	—		—		—		Preferred stock	—		—		—
Common stock	Common stock	1,410		1,401		1,398		Common stock	1,413		1,411		1,409
Additional paid-in capital	Additional paid-in capital	1,191,785		1,095,500		1,059,687		Additional paid-in capital	1,204,294		1,210,512		1,154,451
Treasury stock	Treasury stock	(3,954,926)		(3,356,953)		(3,277,215)		Treasury stock	(4,452,026)		(4,155,846)		(3,610,362)
Accumulated other comprehensive loss		(592)		(3,243)		(5,867)
Accumulated other comprehensive income/(loss)								Accumulated other comprehensive income/(loss)	7,338		1,345		(1,118)
Retained earnings	Retained earnings	4,783,076		4,187,135		4,097,863		Retained earnings	5,029,003		4,945,243		4,307,919
Total stockholders’ equity	Total stockholders’ equity	2,020,753		1,923,840		1,875,866		Total stockholders’ equity	1,790,022		2,002,665		1,852,299
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,745,194	$	7,049,116	$	6,860,797	Total liabilities and stockholders’ equity	$	7,686,808	$	7,767,467	$	7,359,679

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 at all periods presented. ~~176,290, 175,128,~~176,679, 176,371, and ~~174,793~~176,069 shares issued; ~~113,946, 116,246,~~112,075, 113,125, and ~~116,497~~115,587 shares outstanding at ~~September~~March 26, 2022, December 25, 2021, ~~December 26, 2020,~~ and ~~September 26, 2020,~~March 27, 2021, respectively.

Treasury Stock (at cost, shares in thousands): ~~62,344, 58,882,~~64,604, 63,246, and ~~58,296~~60,482 shares at ~~September~~March 26, 2022, December 25, 2021, ~~December 26, 2020,~~ and ~~September 26, 2020,~~March 27, 2021, respectively.

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

Page 3

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Unaudited)


		For the Fiscal Three				For the Fiscal Nine					For the Fiscal Three
		Months Ended				Months Ended					Months Ended
		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020			March 26, 2022		March 27, 2021
Net sales	Net sales	$	3,017,926	$	2,606,572	$	9,411,821	$	7,742,087	Net sales	$	3,024,132	$	2,792,336
Cost of merchandise sold	Cost of merchandise sold	1,932,616		1,658,615		6,055,246		4,976,068		Cost of merchandise sold	1,967,623		1,808,556
Gross profit	Gross profit	1,085,310		947,957		3,356,575		2,766,019		Gross profit	1,056,509		983,780
Selling, general and administrative expenses	Selling, general and administrative expenses	718,261		641,129		2,148,200		1,794,924		Selling, general and administrative expenses	734,577		693,190
Depreciation and amortization	Depreciation and amortization	69,824		54,651		194,731		158,634		Depreciation and amortization	77,646		60,054
Operating income	Operating income	297,225		252,177		1,013,644		812,461		Operating income	244,286		230,536
Interest expense, net	Interest expense, net	6,146		7,208		20,068		20,695		Interest expense, net	7,069		7,221
Income before income taxes	Income before income taxes	291,079		244,969		993,576		791,766		Income before income taxes	237,217		223,315
Income tax expense	Income tax expense	66,679		54,359		217,800		178,701		Income tax expense	49,990		41,961
Net income	Net income	$	224,400	$	190,610	$	775,776	$	613,065	Net income	$	187,227	$	181,354

Net income per share – basic	Net income per share – basic	$	1.96	$	1.64	$	6.74	$	5.27	Net income per share – basic	$	1.66	$	1.56
Net income per share – diluted	Net income per share – diluted	$	1.95	$	1.62	$	6.68	$	5.23	Net income per share – diluted	$	1.65	$	1.55

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	114,223		116,339		115,170		116,330		Basic	112,531		116,153
Diluted	Diluted	115,193		117,745		116,170		117,330		Diluted	113,504		117,227

Dividends declared per common share outstanding	Dividends declared per common share outstanding	$	0.52	$	0.40	$	1.56	$	1.10	Dividends declared per common share outstanding	$	0.92	$	0.52

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

Page 4

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


		For the Fiscal Three				For the Fiscal Nine					For the Fiscal Three
		Months Ended				Months Ended					Months Ended
		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020			March 26, 2022		March 27, 2021
Net income	Net income	$	224,400	$	190,610	$	775,776	$	613,065	Net income	$	187,227	$	181,354

Other comprehensive income/(loss):
Other comprehensive income:										Other comprehensive income:
Change in fair value of interest rate swaps, net of taxes	Change in fair value of interest rate swaps, net of taxes	206		468		2,651		(6,066)		Change in fair value of interest rate swaps, net of taxes	5,993		2,125
Total other comprehensive income/(loss)		206		468		2,651		(6,066)
Total other comprehensive income										Total other comprehensive income	5,993		2,125
Total comprehensive income	Total comprehensive income	$	224,606	$	191,078	$	778,427	$	606,999	Total comprehensive income	$	193,220	$	183,479

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

Page 5

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


		Common Stock			Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. (Loss)/Income		Retained Earnings		Total Stockholders’ Equity			Common Stock			Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. Income		Retained Earnings		Total Stockholders’ Equity
		Shares	Dollars													Shares	Dollars
Stockholders’ equity at December 26, 2020		116,246	$	1,401	$	1,095,500	$	(3,356,953)	$	(3,243)	$	4,187,135	$	1,923,840
Stockholders’ equity at December 25, 2021															Stockholders’ equity at December 25, 2021	113,125	$	1,411	$	1,210,512	$	(4,155,846)	$	1,345	$	4,945,243	$	2,002,665
Common stock issuance under stock award plans & ESPP	Common stock issuance under stock award plans & ESPP	941	8		58,700								58,708		Common stock issuance under stock award plans & ESPP	308	2		7,908								7,910
Share-based compensation expense	Share-based compensation expense				12,318								12,318		Share-based compensation expense				12,316								12,316
Repurchase of shares to satisfy tax obligations	Repurchase of shares to satisfy tax obligations				(12,067)								(12,067)		Repurchase of shares to satisfy tax obligations				(26,442)								(26,442)
Repurchase of common stock	Repurchase of common stock	(1,600)					(253,409)						(253,409)		Repurchase of common stock	(1,358)					(296,180)						(296,180)
Cash dividends paid to stockholders	Cash dividends paid to stockholders										(60,570)		(60,570)		Cash dividends paid to stockholders										(103,467)		(103,467)
Change in fair value of interest rate swaps, net of taxes	Change in fair value of interest rate swaps, net of taxes								2,125				2,125		Change in fair value of interest rate swaps, net of taxes								5,993				5,993
Net income	Net income										181,354		181,354		Net income										187,227		187,227
Stockholders’ equity at March 27, 2021		115,587	$	1,409	$	1,154,451	$	(3,610,362)	$	(1,118)	$	4,307,919	$	1,852,299
Stockholders’ equity at March 26, 2022															Stockholders’ equity at March 26, 2022	112,075	$	1,413	$	1,204,294	$	(4,452,026)	$	7,338	$	5,029,003	$	1,790,022

Common stock issuance under stock award plans & ESPP		154	1		11,317								11,318
Share-based compensation expense					10,876								10,876
Repurchase of shares to satisfy tax obligations					(1,521)								(1,521)
Repurchase of common stock		(1,118)					(203,305)						(203,305)
Cash dividends paid to stockholders											(59,896)		(59,896)
Change in fair value of interest rate swaps, net of taxes									320				320
Net income											370,022		370,022
Stockholders’ equity at June 26, 2021		114,623	$	1,410	$	1,175,123	$	(3,813,667)	$	(798)	$	4,618,045	$	1,980,113

Common stock issuance under stock award plans & ESPP		67	—		5,167								5,167
Share-based compensation expense					12,543								12,543
Repurchase of shares to satisfy tax obligations					(1,048)								(1,048)
Repurchase of common stock		(744)					(141,259)						(141,259)
Cash dividends paid to stockholders											(59,369)		(59,369)
Change in fair value of interest rate swaps, net of taxes									206				206
Net income											224,400		224,400
Stockholders’ equity at September 25, 2021		113,946	$	1,410	$	1,191,785	$	(3,954,926)	$	(592)	$	4,783,076	$	2,020,753

~~Page 6~~

~~Index~~


		Common Stock			Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. Income/(Loss)		Retained Earnings		Total Stockholders’ Equity			Common Stock			Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. (Loss) / Income		Retained Earnings		Total Stockholders’ Equity
		Shares	Dollars													Shares	Dollars
Stockholders’ equity at December 28, 2019		118,165	$	1,389	$	966,698	$	(3,013,996)	$	199	$	3,612,833	$	1,567,123
Stockholders’ equity at December 26, 2020															Stockholders’ equity at December 26, 2020	116,246	$	1,401	$	1,095,500	$	(3,356,953)	$	(3,243)	$	4,187,135	$	1,923,840
Common stock issuance under stock award plans & ESPP	Common stock issuance under stock award plans & ESPP	280	2		10,601								10,603		Common stock issuance under stock award plans & ESPP	941	8		58,700								58,708
Share-based compensation expense	Share-based compensation expense				6,945								6,945		Share-based compensation expense				12,318								12,318
Repurchase of shares to satisfy tax obligations	Repurchase of shares to satisfy tax obligations				(5,407)								(5,407)		Repurchase of shares to satisfy tax obligations				(12,067)								(12,067)
Repurchase of common stock	Repurchase of common stock	(2,853)					(263,219)						(263,219)		Repurchase of common stock	(1,600)					(253,409)						(253,409)
Cash dividends paid to stockholders	Cash dividends paid to stockholders										(40,849)		(40,849)		Cash dividends paid to stockholders										(60,570)		(60,570)
Change in fair value of interest rate swaps, net of taxes	Change in fair value of interest rate swaps, net of taxes								(5,250)				(5,250)		Change in fair value of interest rate swaps, net of taxes								2,125				2,125
Net income	Net income										83,777		83,777		Net income										181,354		181,354
Stockholders’ equity at March 28, 2020		115,592	$	1,391	$	978,837	$	(3,277,215)	$	(5,051)	$	3,655,761	$	1,353,723
Stockholders’ equity at March 27, 2021															Stockholders’ equity at March 27, 2021	115,587	$	1,409	$	1,154,451	$	(3,610,362)	$	(1,118)	$	4,307,919	$	1,852,299

Common stock issuance under stock award plans & ESPP		588	5		39,732								39,737
Share-based compensation expense					7,504								7,504
Repurchase of shares to satisfy tax obligations					(1,984)								(1,984)
Repurchase of common stock		—					—						—
Cash dividends paid to stockholders											(40,644)		(40,644)
Change in fair value of interest rate swaps, net of taxes									(1,284)				(1,284)
Net income											338,678		338,678
Stockholders’ equity at June 27, 2020		116,180	$	1,396	$	1,024,089	$	(3,277,215)	$	(6,335)	$	3,953,795	$	1,695,730

Common stock issuance under stock award plans & ESPP		317	2		23,411								23,413
Share-based compensation expense					12,528								12,528
Repurchase of shares to satisfy tax obligations					(341)								(341)
Repurchase of common stock		—					—						—
Cash dividends paid to stockholders											(46,542)		(46,542)
Change in fair value of interest rate swaps, net of taxes									468				468
Net income											190,610		190,610
Stockholders’ equity at September 26, 2020		116,497	$	1,398	$	1,059,687	$	(3,277,215)	$	(5,867)	$	4,097,863	$	1,875,866

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

Page 76

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		For the Fiscal Nine Months Ended					For the Fiscal Three Months Ended
		September 25, 2021		September 26, 2020			March 26, 2022		March 27, 2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	775,776	$	613,065	Net income	$	187,227	$	181,354
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	194,731		158,634		Depreciation and amortization	77,646		60,054
Loss/(gain) on disposition of property and equipment		3,295		(774)
Loss on disposition of property and equipment						Loss on disposition of property and equipment	326		108
Share-based compensation expense	Share-based compensation expense	35,737		26,977		Share-based compensation expense	12,316		12,318
Deferred income taxes	Deferred income taxes	14,996		(3,734)		Deferred income taxes	39,924		20,158
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Inventories	Inventories	(416,503)		(312,259)		Inventories	(376,987)		(301,407)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(15,891)		(35,233)		Prepaid expenses and other current assets	(21,516)		(12,568)
Accounts payable	Accounts payable	221,717		413,875		Accounts payable	186,015		205,828
Accrued employee compensation	Accrued employee compensation	2,306		80,606		Accrued employee compensation	(60,494)		(51,599)
Other accrued expenses	Other accrued expenses	74,680		20,279		Other accrued expenses	(28,463)		55,305
Income taxes	Income taxes	(26,003)		(11,908)		Income taxes	8,070		20,288
Other	Other	6,996		55,447		Other	35,002		(12,722)
Net cash provided by operating activities	Net cash provided by operating activities	871,837		1,004,975		Net cash provided by operating activities	59,066		177,117
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(382,358)		(161,292)		Capital expenditures	(112,387)		(100,741)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	1,094		1,130		Proceeds from sale of property and equipment	99		222

Net cash used in investing activities	Net cash used in investing activities	(381,264)		(160,162)		Net cash used in investing activities	(112,288)		(100,519)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings under debt facilities		—		1,159,000
Repayments under debt facilities		—		(646,500)
Debt discounts and issuance costs		—		(1,237)

Principal payments under finance lease liabilities	Principal payments under finance lease liabilities	(3,367)		(3,098)		Principal payments under finance lease liabilities	(1,197)		(1,086)
Repurchase of shares to satisfy tax obligations	Repurchase of shares to satisfy tax obligations	(14,636)		(7,732)		Repurchase of shares to satisfy tax obligations	(26,442)		(12,067)
Repurchase of common stock	Repurchase of common stock	(597,973)		(263,219)		Repurchase of common stock	(296,180)		(253,409)
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	75,193		73,753		Net proceeds from issuance of common stock	7,910		58,708
Cash dividends paid to stockholders	Cash dividends paid to stockholders	(179,835)		(128,035)		Cash dividends paid to stockholders	(103,467)		(60,570)
Net cash (used in)/provided by financing activities		(720,618)		182,932
Net change in cash and cash equivalents		(230,045)		1,027,745
Net cash used in financing activities						Net cash used in financing activities	(419,376)		(268,424)
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(472,598)		(191,826)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,341,756		84,241		Cash and cash equivalents at beginning of period	878,030		1,341,756
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,111,711	$	1,111,986	Cash and cash equivalents at end of period	$	405,432	$	1,149,930

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	16,008	$	18,304	Interest	$	4,404	$	4,216
Income taxes	Income taxes	229,122		191,743		Income taxes	3,897		2,071

Supplemental disclosures of non-cash activities:	Supplemental disclosures of non-cash activities:					Supplemental disclosures of non-cash activities:
Non-cash accruals for property and equipment	Non-cash accruals for property and equipment	$	22,036	$	14,199	Non-cash accruals for property and equipment	$	23,538	$	10,301
Increase of operating lease assets and liabilities from new or modified leases	Increase of operating lease assets and liabilities from new or modified leases	534,222		381,486		Increase of operating lease assets and liabilities from new or modified leases	37,694		238,494
Increase of finance lease assets and liabilities from new or modified leases	Increase of finance lease assets and liabilities from new or modified leases	—		6,028		Increase of finance lease assets and liabilities from new or modified leases	5,143		—

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

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TRACTOR SUPPLY COMPANY

NOTES TO UNAUDITED CONDENSED 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). ~~Our~~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”~~("Petsense"), 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. At ~~September 25, 2021,~~March 26, 2022, the Company operated a total of ~~2,144~~2,181 retail stores in 49 states ~~(1,967~~(2,003 Tractor Supply ~~and Del’s~~ retail stores and ~~177~~178 Petsense retail stores) and also offered an expanded assortment of products through the Tractor Supply ~~Company~~ mobile application and online at TractorSupply.com and Petsense.com.

On February 17, 2021, the Company announced that it entered into an agreement to acquire all of the outstanding equity interests of Orscheln Farm and Home, LLC, a farm and ranch retailer with 167 retail stores in 11 states, in an all-cash transaction for approximately $320 million. The ~~Company intends to fund the acquisition through cash-on-hand. The~~ acquisition is conditioned on the receipt of regulatory clearance and satisfactory completion of customary closing conditions. The Company continues to work collaboratively with the Federal Trade Commission on the transaction.

Basis of Presentation

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“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 ~~26, 2020.~~25, 2021. The results of operations for our interim periods are not necessarily indicative of results for the full fiscal year.

COVID-19 Pandemic

The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty, and volatility which may negatively affect our business operations. As a result, if the pandemic persists or worsens, our accounting estimates and assumptions could be impacted in subsequent interim reports and upon final determination at year-end, and it is reasonably possible such changes could be ~~significant (although the potential effects cannot be estimated at this time).~~significant.

New Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope." This collective guidance is in response to accounting concerns regarding contract modifications and hedge accounting because of impending rate reform associated with structural risks of interbank offered rates (IBORs), and, particularly, the risk of cessation of the London Inter-Bank Offer Rate ("LIBOR") related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. The guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not expect the adoption of this guidance to have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

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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 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 receivables, and trade payables approximate current fair value at each balance sheet date. As described in further detail in Note 5 to the Condensed Consolidated Financial Statements, the Company had $1.00 billion in borrowings under its debt facilities at ~~September~~each of March 26, 2022, December 25, 2021, and ~~December 26, 2020, and $910.0 million in borrowings under its debt facilities at September 26, 2020.~~March 27, 2021. Based on market interest rates (Level 2 inputs), the carrying value of borrowings in our debt facilities approximates fair value for each period reported. The fair value of the Company’s interest rate swaps is determined based on the present value of expected future cash flows using forward rate curves (a Level 2 input). ~~As described in further detail in Note 6 to the Condensed Consolidated Financial Statements, the~~The fair value of the interest rate swaps, excluding accrued interest,

~~Page 9~~

~~Index~~

was a net asset of $9.9 million and $1.8 million at March 26, 2022 and December 25, 2021, respectively, and a net liability of ~~$0.8 million, $4.4 million, and $7.9~~$1.5 million at ~~September 25, 2021, December 26, 2020,~~March 27, 2021. In accordance with hedge accounting, the gains and ~~September 26, 2020, respectively.~~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 during which the hedged transactions affect earnings.

Note 3 – Share-Based Compensation:

Share-based compensation includes stock options, restricted stock units, performance-based restricted share units, and transactions under our 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 plus a 15% discount on shares purchased by employees as a part of the ESPP. The discount under the ESPP represents the difference between the purchase date market value and the employee’s purchase price.

There were no significant modifications to the Company’s share-based compensation plans during the fiscal ~~nine~~three months ended

~~September 25, 2021.~~March 26, 2022.

Share-based compensation expense was ~~$12.5~~$12.3 million for each of the ~~third~~first quarter of fiscal ~~2021 and 2020, and $35.7 million and $27.0 million for the first nine months of fiscal 2021~~2022 and fiscal ~~2020, respectively.~~2021.

Stock Options

The following table summarizes information concerning stock option grants during the first ~~nine~~three months of fiscal ~~2021:~~2022:


	Fiscal ~~Nine~~Three Months Ended
	~~September 25, 2021~~March 26, 2022
Stock options granted	~~247,832~~135,268
Weighted average exercise price	$	~~145.59~~221.95
Weighted average grant date fair value per option	$	~~30.71~~49.92

As of ~~September 25, 2021,~~March 26, 2022, total unrecognized compensation expense related to non-vested stock options was approximately ~~$10.1~~$13.4 million with a remaining weighted average expense recognition period of ~~2.0~~2.3 years.

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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~~three months of fiscal ~~2021:~~2022:


	Fiscal ~~Nine~~Three Months Ended
	~~September 25, 2021~~March 26, 2022
Restricted stock units granted	~~271,249~~161,524
Weighted average grant date fair value per share - Restricted stock units	$	213.60
Performance-based restricted share units granted (a)	~~60,058~~50,620
Weighted average grant date fair value per share - Performance-based restricted share units	$	~~144.09~~225.15

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

In the first ~~nine~~three months of fiscal ~~2021,~~2022, 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 and will cliff vest in full on the third anniversary of the date of the ~~grant.~~grant, subject to continued employment.

As of ~~September 25, 2021,~~March 26, 2022, total unrecognized compensation expense related to non-vested restricted stock units and non-vested performance-based restricted share units was approximately ~~$63.3~~$88.1 million with a remaining weighted average expense recognition period of ~~2.1~~2.3 years.

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~~Index~~

Note 4 – Net Income Per Share:

The Company presents both basic and diluted net income per share on the Condensed 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 Fiscal Three Months Ended
September 25, 2021 September 26, 2020
Income Shares Per Share
Amount Income Shares Per Share
Amount
Basic net income per share: $ 224,400 114,223 $ 1.96 $ 190,610 116,339 $ 1.64
Dilutive effect of share-based awards — 970 (0.01) — 1,406 (0.02)
Diluted net income per share: $ 224,400 115,193 $ 1.95 $ 190,610 117,745 $ 1.62


		Fiscal Nine Months Ended					Fiscal Nine Months Ended						Fiscal Three Months Ended
		September 25, 2021					September 26, 2020						March 26, 2022					March 27, 2021
		Income		Shares	Per Share Amount		Income		Shares	Per Share Amount			Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic net income per share:	Basic net income per share:	$	775,776	115,170	$	6.74	$	613,065	116,330	$	5.27	Basic net income per share:	$	187,227	112,531	$	1.66	$	181,354	116,153	$	1.56
Dilutive effect of share-based awards	Dilutive effect of share-based awards	—		1,000	(0.06)		—		1,000	(0.04)		Dilutive effect of share-based awards	—		973	(0.01)		—		1,074	(0.01)
Diluted net income per share:	Diluted net income per share:	$	775,776	116,170	$	6.68	$	613,065	117,330	$	5.23	Diluted net income per share:	$	187,227	113,504	$	1.65	$	181,354	117,227	$	1.55

Anti-dilutive stock awards excluded from the above calculations totaled less than 0.1 million and approximately 0.2 million shares for the fiscal three months ended ~~September 25,~~March 26, 2022 and March 27, 2021, and September 26, 2020. Anti-dilutive stock awards excluded from the above calculations also totaled less than 0.1 million shares for the fiscal nine months ended September 25, 2021 and September 26, 2020.respectively.

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Note 5 – Debt:

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


		September 25, 2021		December 26, 2020		September 26, 2020			March 26, 2022		December 25, 2021		March 27, 2021
1.75% Senior Notes due 2030	1.75% Senior Notes due 2030	$	650.0	$	650.0	$	—	1.75% Senior Notes due 2030	$	650.0	$	650.0	$	650.0
3.70% Senior Notes due 2029(a)	3.70% Senior Notes due 2029(a)	150.0		150.0		150.0		3.70% Senior Notes due 2029(a)	150.0		150.0		150.0
Senior Credit Facility:	Senior Credit Facility:							Senior Credit Facility:
February 2016 Term Loan		—		—		130.0
June 2017 Term Loan		—		—		80.0
March 2020 Term Loan		—		—		200.0
April 2020 Term Loan		—		—		350.0
November 2020 Term Loan	November 2020 Term Loan	200.0		200.0		—		November 2020 Term Loan	200.0		200.0		200.0
Revolving credit loans	Revolving credit loans	—		—		—		Revolving credit loans	—		—		—
Total outstanding borrowings	Total outstanding borrowings	1,000.0		1,000.0		910.0		Total outstanding borrowings	1,000.0		1,000.0		1,000.0
Less: unamortized debt discounts and issuance costs	Less: unamortized debt discounts and issuance costs	(14.1)		(15.7)		(0.7)		Less: unamortized debt discounts and issuance costs	(13.1)		(13.6)		(15.2)
Total debt	Total debt	985.9		984.3		909.3		Total debt	986.9		986.4		984.8
Less: current portion of long-term debt	Less: current portion of long-term debt	—		—		(380.0)		Less: current portion of long-term debt	—		—		—
Long-term debt	Long-term debt	$	985.9	$	984.3	$	529.3	Long-term debt	$	986.9	$	986.4	$	984.8

Outstanding letters of credit	Outstanding letters of credit	$	46.5	$	48.7	$	50.4	Outstanding letters of credit	$	52.8	$	52.9	$	60.3

~~Page 11~~

~~Index~~

~~1.75% Senior Notes due 2030~~

~~On October 30, 2020,~~(a) Also referred to herein as the Company issued and sold, in a public offering, $650 million in aggregate principal amount of senior unsecured notes due November 1, 2030, bearing interest at 1.75% per annum (the “1.75% Senior Notes”). The entire principal amount of the 1.75% Senior Notes is due in full on November 1, 2030. Interest is payable semi-annually in arrears on each November 1 and May 1. The terms of the 1.75% Senior Notes are governed by an indenture dated as of October 30, 2020 (the “Base Indenture”) between the Company and Regions Bank, as trustee, as amended and supplemented by a first supplemental indenture dated as of October 30, 2020 (the “Supplemental Indenture”), between the Company and Regions Bank, as trustee.

The 1.75% Senior Notes are senior unsecured debt obligations of the Company and will rank equally with the Company’s other senior unsecured liabilities and senior to any future subordinated indebtedness of the Company. The 1.75% Senior Notes are subject to customary covenants restricting the Company’s ability, subject to certain exceptions, to incur debt secured by liens, to enter into sale and leaseback transactions, or to merge or consolidate with another entity or sell substantially all of its assets to another person.

At any time prior to August 1, 2030, the Company will have the right, at its option, to redeem the 1.75% Senior Notes, in whole or in part, at any time and from time to time, by paying the greater of 100% of the principal amount of the 1.75% Senior Notes to be redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest through the par call date, plus, in each case, accrued and unpaid interest to, but not including, the date of redemption. In addition, on or after August 1, 2030, the Company will have the right, at its option, to redeem the 1.75% Senior Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 1.75% Senior Notes to be redeemed, plus accrued and unpaid interest to, but not including the date of redemption.

If a Change of Control Triggering Event (as defined in the Supplemental Indenture) occurs, unless the Company has exercised its right to redeem the 1.75% Senior Notes, holders of the 1.75% Senior Notes may require the Company to repurchase all or any part of such holder’s 1.75% Senior Notes at a purchase price of 101% of the principal amount of the 1.75% Senior Notes being purchased, plus accrued and unpaid interest, if any, on such 1.75% Senior Notes to, but not including, the purchase date. Upon the occurrence of an event of default with respect to the 1.75% Senior Notes, which includes payment defaults, defaults in the performance of certain covenants, cross defaults, and bankruptcy and insolvency related defaults, the Company’s obligations under the 1.75% Senior Notes may be accelerated, in which case the entire principal amount of the 1.75% Senior Notes would be due and payable immediately.

~~Senior Note Facility (including 3.70% Senior Notes due 2029)~~

~~On August 14, 2017, the Company entered into a note purchase and private shelf agreement (the “Note~~"Note Purchase Agreement”), as amended from time to time, pursuant to which the Company agreed to sell, in a private placement, $150 million aggregate principal amount of senior unsecured notes due August 14, 2029, bearing interest at 3.70% per annum (the “3.70% Senior Notes”). The entire principal amount of the 3.70% Senior Notes is due in full on August 14, 2029. Interest is payable semi-annually in arrears on each annual and semi-annual anniversary of the issuance date. The obligations under the Note Purchase Agreement are unsecured.

The Company may from time-to-time issue and sell additional senior unsecured notes (the “Shelf Notes”) pursuant to the Note Purchase Agreement, in an aggregate principal amount of up to $300 million minus the aggregate principal amount of all notes outstanding and issued under the Note Purchase Agreement. The Shelf Notes will have a maturity date of no more than 12 years after the date of original issuance and may be issued through November 4, 2023, unless earlier terminated in accordance with the terms of the Note Purchase Agreement.

Pursuant to the Note Purchase Agreement, the 3.70% Senior Notes and any Shelf Notes (collectively, the "Senior Note Facility") are redeemable by the Company, in whole at any time or in part from time to time, at 100% of the principal amount of the Senior Note Facility being redeemed, together with accrued and unpaid interest thereon and a make whole amount calculated by discounting all remaining scheduled payments on the Senior Note Facility by the yield on the U.S. Treasury security with a maturity equal to the remaining average life of the Senior Note Facility plus 0.50%.

~~Senior Credit Facility~~

On February 19, 2016, the Company entered into a senior credit facility, as amended from time to time, and as amended and restated on November 4, 2020 (the “Senior Credit Facility”), which provides borrowing capacity under term loan facilities as well as a revolving credit facility. There are no compensating balance requirements associated with the Senior Credit Facility.

~~Page 12~~

~~Index~~

The Senior Credit Facility contains a $500 million revolving credit facility (the “Revolver”) with a sublimit of $50 million for swingline loans and a sublimit of $150 million for letters of credit. This agreement is unsecured and matures on November 4, 2023, which, subject to satisfaction of certain terms and conditions, may be extended at the option of the Company to November 4, 2024 (as may be extended, the “Senior Credit Facility Maturity Date”).

Under the Senior Credit Facility, on November 4, 2020, a $200 million term loan (the “November 2020 Term Loan”) was extended to the Company. The November 2020 Term Loan is unsecured, and the entire principal amount is due in full on the Senior Credit Facility Maturity Date.Agreement"

Borrowings under both the ~~Revolver~~Company's $500 million revolving credit facility (the "Revolver") and the ~~November~~Company's $200 million term loan (the "November 2020 Term ~~Loan~~Loan") each under our senior credit facility (the "Senior Credit Facility") bear interest either at the bank’s base rate (3.250% at ~~September 25, 2021)~~March 26, 2022) plus an additional amount ranging from 0.000% to 0.375% (0.125% at ~~September 25, 2021)~~March 26, 2022) or at the London Inter-Bank Offer Rate (“LIBOR”) ~~(0.085%~~(0.445% at ~~September 25, 2021)~~March 26, 2022) plus an additional amount ranging from 0.875% to 1.375% per annum (1.125% at ~~September 25, 2021)~~March 26, 2022), adjusted based on the Company's public credit ratings. The Company is also required to pay, quarterly in arrears, a commitment fee related to unused capacity on the Revolver ranging from 0.090% to 0.200% per annum (0.125% at ~~September 25, 2021)~~March 26, 2022), adjusted based on the Company's public credit ratings.

~~As further described in Note 6, the~~The Company has entered into an interest rate swap agreement in order to hedge our exposure to variable rate interest payments associated with the Senior Credit Facility.

~~On February 19, 2016,~~ The interest rate swap agreement will mature on March 18, 2025 and the ~~Company entered into a~~notional amount of the agreement is fixed at $200 ~~million term loan agreement (the “February 2016 Term Loan”). This agreement was repaid in full on November 4, 2020, and is no longer in effect.~~

On June 15, 2017, the Company entered into a $100 million incremental term loan agreement (the “June 2017 Term Loan”). This agreement was repaid in full on November 4, 2020, and is no longer in effect.

On March 12, 2020, the Company entered into a $200 million incremental term loan agreement (the “March 2020 Term Loan”). This agreement was repaid in full on November 4, 2020, and is no longer in effect.

On April 22, 2020, the Company entered into a $350 million incremental term loan agreement (the "April 2020 Term Loan"). This agreement was repaid in full on October 30, 2020, and is no longer in effect.million.

Covenants and Default Provisions of the Debt Agreements

The Senior Credit Facility and the Note Purchase Agreement (collectively, the “Debt Agreements”) require 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 shall be greater than or equal to ~~2.00~~2.0 to 1.0 as of the last day of each fiscal quarter. The leverage ratio compares total funded debt to consolidated EBITDAR. The leverage ratio shall be less than or equal to ~~4.00~~4.0 to 1.0 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 25, 2021,~~March 26, 2022, 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, payment under the Debt Agreements could become due and payable. In addition, under the Note Purchase Agreement, upon an event of default or change of control, the make whole payment described above may become due and payable.

The Note Purchase Agreement also requires that, in the event the Company amends its 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 Agreement or that are similar to those contained in the Note Purchase Agreement but which contain percentages, amounts, formulas, or grace periods that are more restrictive than those set forth in the Note Purchase Agreement or are otherwise more beneficial to the lenders thereunder, the Note Purchase Agreement shall be automatically amended to include such additional or amended covenants and/or default provisions.

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~~Note 6 – Interest Rate Swaps:~~

The Company entered into an interest rate swap agreement which became effective on March 18, 2020, with a maturity date of March 18, 2025. The notional amount of this swap agreement is fixed at $200 million.

The Company previously had interest rate swap agreements associated with the February 2016 Term Loan and the June 2017 Term Loan, each of which was settled in full on November 10, 2020, following the repayment and termination of the associated term loans, and are no longer in effect.

The Company’s interest rate swap agreements are executed for risk management and are not held for trading purposes. The objective of the interest rate swap agreements is to mitigate interest rate risk associated with future changes in interest rates. To accomplish this objective, the interest rate swap agreements are intended to hedge the variable cash flows associated with the variable rate term loan borrowings under the Senior Credit Facility. The interest rate swap agreements entitle the Company to receive, at specified intervals, a variable rate of interest based on LIBOR in exchange for the payment of a fixed rate of interest throughout the life of the agreement, without exchange of the underlying notional amount.

The Company has designated its interest rate swap agreements as cash flow hedges and accounts for the underlying activity in accordance with hedge accounting. The interest rate swaps are presented within the Condensed Consolidated Balance Sheets at fair value. 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 (“OCI”), net of related income taxes, and reclassified into earnings in the same income statement line and period during which the hedged transactions affect earnings.

As of September 25, 2021, amounts to be reclassified from Accumulated Other Comprehensive Income/(Loss) (“AOCI”) into interest during the next twelve months are not expected to be material. No significant amounts were excluded from the assessment of cash flow hedge effectiveness as of September 25, 2021.

~~The assets and liabilities measured at fair value related to the Company’s interest rate swaps, excluding accrued interest, were as follows (in thousands):~~

Derivatives Designated
as Cash Flow Hedges
Balance Sheet Location September 25,
2021 December 26,
2020 September 26,
2020
Interest rate swaps (long-term portion) Other assets $ 465 $ — $ —
Total derivative assets $ 465 $ — $ —
Interest rate swaps (short-term portion) Other accrued expenses $ 1,260 $ 1,227 $ 2,831
Interest rate swaps (long-term portion) Other long-term liabilities — 3,137 5,055
Total derivative liabilities $ 1,260 $ 4,364 $ 7,886

The offset to the interest rate swap asset or liability is recorded as a component of equity, net of deferred taxes, in AOCI, and will be reclassified into earnings over the term of the underlying debt as interest payments are made.

~~The following table summarizes the changes in AOCI, net of tax, related to the Company’s interest rate swaps (in thousands):~~

September 25,
2021 December 26,
2020 September 26,
2020
Beginning fiscal year AOCI balance $ (3,243) $ 199 $ 199
Current fiscal period gain/(loss) recognized in OCI 2,651 (5,666) (6,066)
Amounts reclassified from AOCI — 2,224 —
Other comprehensive gain/(loss), net of tax 2,651 (3,442) (6,066)
Ending fiscal period AOCI balance $ (592) $ (3,243) $ (5,867)

~~Cash flows related to the interest rate swaps are included in operating activities on the Condensed Consolidated Statements of Cash Flows.~~

~~Page 14~~11

Index

~~The following table summarizes the impact of pre-tax gains and losses derived from the Company’s interest rate swaps (in thousands):~~

Fiscal Three Months Ended Fiscal Nine Months Ended
Financial Statement Location September 25,
2021 September 26,
2020 September 25,
2021 September 26,
2020
Amount of gains/(losses) recognized in OCI during the period Other comprehensive income/(loss) $ 278 $ 629 $ 3,569 $ (8,153)

~~The following table summarizes the impact of taxes affecting AOCI as a result of the Company’s interest rate swaps (in thousands):~~

Fiscal Three Months Ended Fiscal Nine Months Ended
September 25,
2021 September 26,
2020 September 25,
2021 September 26,
2020
Income tax expense/(benefit) of interest rate swaps on AOCI $ 72 $ 161 $ 918 $ (2,087)

~~Credit-risk-related contingent features~~

In accordance with the underlying interest rate swap agreements, the Company could be declared in default on its interest rate swap obligations if repayment of the underlying indebtedness (i.e., the Company’s term loans) is accelerated by the lender due to the Company’s default on such indebtedness.

If the Company had breached any of the provisions in the underlying agreements at September 25, 2021, it could have been required to post full collateral or settle its obligations under the Company’s interest rate swap agreements. However, as of September 25, 2021, the Company had not breached any of these provisions or posted any collateral related to the underlying interest rate swap agreements.

Note 76 – 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~~three months of fiscal ~~2021~~2022 and fiscal ~~2020,~~2021, 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 4, 2021~~January 26, 2022

~~0.52~~0.92

~~August 23, 2021~~February 21, 2022

~~September~~March 8, ~~2021~~2022

~~May 5, 2021~~

~~0.52~~

~~May 24, 2021~~

~~June 8, 2021~~

January 27, 2021

0.52

February 22, 2021

March 9, 2021

~~August 5, 2020~~

~~0.40~~

~~August 24, 2020~~

~~September 9, 2020~~

~~May 6, 2020~~

~~0.35~~

~~May 26, 2020~~

~~June 9, 2020~~

~~February 5, 2020~~

~~0.35~~

~~February 24, 2020~~

~~March 10, 2020~~

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.

~~Page 15~~

~~Index~~

On November 3, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.52 per share of the Company’s outstanding common stock. The dividend will be paid on December 8, 2021, to stockholders of record as of the close of business on November 22, 2021.

Note 87 – 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 was increased by the Company's Board of Directors on January 26, 2022 by $2.0 billion for a total authorization ~~amount~~ of ~~the program, which has been increased from time to time, is currently authorized for up to $4.5~~$6.5 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, ~~(as it was from March 12, 2020 until November 5, 2020 in order to strengthen the Company's liquidity and preserve cash while navigating the COVID-19 pandemic),~~ or terminated at any time without prior notice. As of ~~September 25, 2021,~~March 26, 2022, the Company had remaining authorization under the share repurchase program of ~~$545.9 million,~~$2.0 billion, exclusive of any fees, commissions, or other expenses.

The following table provides the number of shares repurchased, average price paid per share, and total amount paid for share repurchases during the fiscal three ~~and nine~~ months ended ~~September 25,~~March 26, 2022 and March 27, 2021, ~~and September 26, 2020,~~ respectively (in thousands, except per share amounts):


		Fiscal Three Months Ended				Fiscal Nine Months Ended					Fiscal Three Months Ended
		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020			March 26, 2022		March 27, 2021
Total number of shares repurchased	Total number of shares repurchased	744		—		3,462		2,853		Total number of shares repurchased	1,358		1,600
Average price paid per share	Average price paid per share	$	190.03	$	—	$	172.73	$	92.28	Average price paid per share	$	218.07	$	158.35
Total cash paid for share repurchases	Total cash paid for share repurchases	$	141,259	$	—	$	597,973	$	263,219	Total cash paid for share repurchases	$	296,180	$	253,409

Note 98 – Income Taxes:

The Company’s effective income tax rate was ~~22.9%~~21.1% in the ~~third~~first quarter of fiscal ~~2021~~2022 compared to ~~22.2%~~18.8% in the ~~third~~first quarter of fiscal ~~2020.~~2021. The ~~effective income tax rate was 21.9% in the first nine months of fiscal 2021 compared to 22.6% in the first nine months of fiscal 2020. The improvement~~increase in the effective income tax rate in the first ~~nine~~three months of fiscal 2022 compared to the first three months of fiscal 2021 ~~compared to the first nine months of fiscal 2020~~ was primarily related to a decrease in a discrete incremental tax benefit associated with share-based compensation.

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Note 109 – Commitments and Contingencies:

Construction and Real Estate Commitments

The Company is building a new distribution ~~center~~centers in Navarre, Ohio and Maumelle, Arkansas, for which, ~~is expected to be approximately 900,000 square feet and is currently anticipated to be complete by the end~~as of ~~fiscal 2022. At September 25, 2021,~~March 26, 2022, the Company had contractual commitments of approximately ~~$93.8~~$32 million ~~related to the construction of this new distribution center.~~and $0, respectively.

Letters of Credit

At ~~September 25, 2021,~~March 26, 2022, there were ~~$46.5~~$52.8 million ofin outstanding ~~letters~~letter of credit under the Senior Credit Facility.

~~Page 16~~

~~Index~~

Litigation

On October 9, 2020, an alleged stockholder, the City of Pontiac Police and Fire Retirement System, filed a derivative lawsuit in the U.S. District Court for the Middle District of Tennessee, purportedly on the Company's behalf, against certain current and former members of our Board of Directors, and the Company as a nominal defendant, seeking unspecified compensatory and punitive damages payable to the Company, disgorgement, restitution, corporate governance and hiring changes, mandated community investment, and attorneys' fees and costs. Plaintiff ~~alleges~~alleged that defendants violated the federal securities laws governing proxy solicitations and breached their fiduciary duties by misrepresenting the ~~Company’s~~Company's commitment to and support for diversity and inclusion. The Company ~~disputes~~disputed the allegations of the complaint. The Company and the individual defendants moved to dismiss the complaint based on ~~plaintiff’s~~plaintiff's failure to make a demand on the Board of Directors and to state a claim upon which relief may be granted. ~~While~~The case was dismissed during the ~~ultimate outcome~~first quarter of ~~this matter is currently not determinable, we do not believe this litigation will have a~~2022 with no material impact onto our Condensed Consolidated Financial Statements.

The Company is ~~also~~ involved in various ~~other~~ 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 Condensed Consolidated Financial Statements.

Note 1110 – Segment Reporting:

The Company has 1 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 major product category during the fiscal three ~~and nine~~ months ended ~~September 25, 2021~~March 26, 2022 and ~~September 26, 2020:~~March 27, 2021:


		Fiscal Three Months Ended				Fiscal Nine Months Ended					Fiscal Three Months Ended
Product Category:	Product Category:	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020		Product Category:	March 26, 2022		March 27, 2021
Livestock and Pet	Livestock and Pet	49	%	48	%	48	%	48	%	Livestock and Pet	53	%	51	%
Hardware, Tools and Truck										Hardware, Tools and Truck	19		21
Seasonal, Gift and Toy Products	Seasonal, Gift and Toy Products	19		19		21		21		Seasonal, Gift and Toy Products	17		18
Hardware, Tools and Truck		22		23		21		21
Clothing and Footwear	Clothing and Footwear	5		5		6		5		Clothing and Footwear	8		7
Agriculture	Agriculture	5		5		4		5		Agriculture	3		3
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

~~Note 12 – New Accounting Pronouncements:~~

~~New Accounting Pronouncements Not Yet Adopted~~

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope." This collective guidance is in response to accounting concerns regarding contract modifications and hedge accounting because of impending rate reform associated with structural risks of interbank offered rates (IBORs), and, particularly, the risk of cessation of LIBOR related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. The guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not expect the adoption of this guidance to have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2020~~25, 2021 (the ~~"2020~~"2021 Form 10-K"). This Quarterly Report on Form 10-Q also contains forward-looking statements and information. The forward-looking statements included herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”). All statements, other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including sales and earnings growth, estimated results of operations in future periods, the declaration and payment of dividends, the timing and amount of share repurchases, future capital expenditures (including their amount and nature), business strategy, strategic initiatives, expansion and growth of our business operations, and other such matters are forward-looking statements. Forward-looking statements are usually identified by or are associated with such words as "intend," "expect," "believe," "anticipate," "optimistic" and similar terminology. These forward-looking statements may be affected by certain risks and uncertainties, any one, or a combination of which, could materially affect the results of our operations. To take advantage of the safe harbor provided by the Act, we are identifying certain factors that could cause actual results to differ materially from those expressed in any forward-looking ~~statements, whether oral or written.~~statements.

As with any business, ~~many aspects~~all phases of our operations are subject to influences outside our control. These factors include, without limitation, the timing of normalized macroeconomic conditions from the impacts of the COVID-19 pandemic, the Company's ability to predict the timing of normalized macroeconomic conditions, national, regional and local economic conditions affecting consumer spending, including the effects of COVID-19, inflation and gas prices, effects resulting from wars or other military operations, including the heightened risk of cyberattacks as a result of the hostilities between Russia and Ukraine; the availability of information technology hardware; the effects that “shelter in place” or other similar mandated or suggested social distancing protocols could have on the business, the costs of doing business as a retailer during the COVID-19 pandemic, the ~~efficacy~~effectiveness of the Company’s responses to COVID-19 and ~~distribution~~customer response with respect to those actions, the effects of COVID-19 ~~vaccines,~~on our suppliers, business partners and supply chain, the timing and acceptance of new products, the timing and mix of goods sold, weather conditions, the seasonal nature of our business, transportation costs, including but not limited to, carrier rates, fuel costs, and other pressures across our supply chain, purchase price volatility (including inflationary and deflationary pressures), ~~transportation costs, constraints in the supply chain affecting timing and availability of merchandise inventory,~~ the ability to increase sales at existing stores or on our e-commerce ~~platforms,~~platform, the ability to manage growth and identify suitable locations for our stores, the ~~ability~~possibility that the acquisition of Orscheln Farm and Home (the “Transaction”) will not close or that the closing may be delayed, the possibility that we may be unable to ~~complete acquisitions on~~obtain regulatory clearance for the Transaction, the potential for litigation or governmental investigations relating to the Transaction, the occurrence of events, changes or circumstances that could give rise to the termination of the definitive agreement for the Transaction, the risk that we may be unable to successfully integrate any acquired business or that we may not realize the benefits expected ~~terms,~~from an acquisition, including the Transaction, potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of an acquisition, including the Transaction, failure of an acquisition to produce anticipated results, the ability to successfully manage expenses, ~~(including increased expenses as a result~~particularly in light of ~~operating as an essential retailer during~~COVID-19, including but not limited to, increases in wages, the ~~COVID-19 pandemic) and~~ability to successfully execute ~~our~~ key gross margin enhancing initiatives, the availability of favorable credit sources, capital market conditions in general, the timing and amount of share repurchases, the ability to open new stores in the ~~time,~~ manner, timing and number currently contemplated, ~~particularly in light of the COVID-19 pandemic, the ability to open distribution centers in the anticipated timeframe and within budget,~~ the impact of new stores on ~~our~~the business, competition, including ~~that~~competition from online ~~competitors, weather conditions, the seasonal nature of our business,~~retailers, marketing, merchandising and strategic initiatives, effective merchandising initiatives and marketing emphasis, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train and retain qualified employees, our ability to meet our sustainability, stewardship, carbon emission and ~~DE&I~~Diversity, Equity & Inclusion related ~~ESG~~Environmental, Social and Governance projections, goals and commitments, product liability and other claims, changes in federal, state or local regulations, the effects that “shelter in place” and similar federal, state, and local regulations and protocols could have on our business, including our supply chain and employees, the effectiveness of the Company’s responses to COVID-19, including our efforts to make a vaccine available to our employees, and customer response with respect to those actions, the refusal by our employees and the public generally to be vaccinated against COVID-19, the imposition of tariffs on imported products or the disallowance of tax deductions on imported products, potential judgments, fines, legal fees and other costs, breach of information systems or theft of employee or customer data, ongoing and potential future legal or regulatory proceedings, management of our information systems, failure to develop and implement new technologies, the failure of customer-facing technology systems, business disruption including from the implementation of supply chain technologies, effective tax rate changes, and results of examination by taxing authorities, the imposition of tariffs on imported products or the disallowance of tax deductions on imported products, the ability to maintain an effective system of internal control over financial reporting, and changes in accounting standards, assumptions and estimates. ~~We discuss in greater detail risk factors relating to our business in Part I, Item 1A~~Forward-looking statements made by or on behalf of ~~our 2020 Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Forward-looking statements~~the Company are based on our knowledge of our business and the environment in which we operate, but because of the factors listed above or other factors, actual results could differ materially from those reflected by any forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these cautionary statements and ~~there~~those contained in the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (the "SEC"). There can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or our business and operations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake no any

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obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated ~~events.~~events, except as required by law.

Information Regarding COVID-19 Coronavirus Pandemic

~~The Company continues~~We have been and will continue to closely monitor the impact of the COVID-19 pandemic on all facets of our business. This includes the impact on our team members, customers, suppliers, vendors, business partners, and supply chain networks.

The health and safety of our team members and customers are the primary concerns of our management team. WeOver the course of the pandemic, we have taken and continue to take numerous actions to promote health and safety, including encouraging vaccination efforts, providing personal protective equipment to our team members, following local and federal guidance regarding the use of masks in our

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~~Index~~

facilities, maintaining enhanced services for cleaning and sanitation, continuing to provide additional functionality to support contactless shopping experiences, promoting social distancing and cleaning actions in our stores, and continuing to offer remote work plans at our ~~store support center.~~Store Support Center.

As further described in the results of operations, our net sales have continued to increase due to customer demand across all major product categories, channels, and geographic regions. However, the net incremental costs of doing business during this pandemic have increased, as a result of the aforementioned actions we have taken, and continue to take, to support and promote the safety and well-being of our team members and customers, and we believe many of these incremental costs will continue after the pandemic is over.

There are numerous uncertainties surrounding the pandemic and its impact on the economy and our business, as further described in the Risk Factors section under Part I, Item 1A of our ~~2020~~ 2021 Form 10-K, which make it difficult to predict the impact on our business, financial position, or results of operations in fiscal ~~2021~~2022 and beyond. ~~While our stores, distribution centers, and e-commerce operations are open and plan to remain open, we~~We cannot predict ~~the~~these uncertainties, or the corresponding impacts on our business, at this time.

Seasonality and Weather

Our business is seasonal. Historically, our sales and profits are the highest in the second and fourth fiscal quarters due to the sale of seasonal products. We usually experience our highest inventory and accounts payable balances during our first fiscal quarter for purchases of seasonal products to support the higher sales volume of the spring selling season, and again during our third fiscal quarter to support the higher sales volume of the cold weather selling season. We believe that our business can be more accurately assessed by focusing on the performance of the halves, not the quarters, due to the fact that different weather patterns from year-to-year can shift the timing of sales and profits between quarters, particularly between the first and second fiscal quarters and the third and fourth fiscal quarters.

Historically, weather conditions, including unseasonably warm weather in the fall and winter months and unseasonably cool weather in the spring and summer months, have unfavorably affected the timing and volume of our sales and results of operations. In addition, extreme weather conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes, extreme rain, and droughts have impacted operating results both negatively and positively, depending on the severity and length of these conditions. Our strategy is to manage product flow and adjust merchandise assortments and depth of inventory to capitalize on seasonal demand trends.

~~Furthermore, we are not able to predict at this time the impact that the COVID-19 pandemic may have on the seasonality of our business in the future.~~

Performance Metrics

Comparable Store Metrics

Comparable store metrics are a key performance indicator used in the retail industry and by the Company to measure the performance of the underlying business. Our comparable store metrics are calculated on an annual basis using sales generated from all stores open at least one year and all online sales and exclude certain adjustments to net sales. Stores closed during either of the years being compared are removed from our comparable store metrics calculations. Stores relocated during either of the years being compared are not removed from our comparable store metrics calculations. If the effect of relocated stores on our comparable store metrics calculations became material, we would remove relocated stores from the calculations.

Transaction Count and Transaction Value

Transaction count and transaction value metrics are used by the Company to measure sales performance. Transaction count represents the number of customer transactions during a given period. Transaction value represents the average amount paid per transaction and is calculated as net sales divided by the total number of customer transactions during a given period.

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Results of Operations

Fiscal Three Months ~~(Third~~(First Quarter) Ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~

Net sales for the ~~third~~first quarter of fiscal ~~2021~~2022 increased ~~15.8%~~8.3% to $3.02 billion from ~~$2.61~~$2.79 billion for the ~~third~~first quarter of fiscal ~~2020.~~2021. Comparable store sales for the ~~third~~first quarter of fiscal ~~2021~~2022 were ~~$2.95~~$2.94 billion, a ~~13.1%~~5.2% increase as compared to the ~~third~~first quarter of fiscal ~~2020.~~2021. In the ~~third~~first quarter of fiscal ~~2020,~~2021, net sales increased ~~31.4%~~42.5% and comparable store sales increased ~~26.8%~~38.6%.

The comparable store sales results for the ~~third~~first quarter of fiscal ~~2021~~2022 included an increase in comparable average transaction value of ~~9.5%~~6.7% and ~~an increase~~a decrease in comparable average transaction count of ~~3.6%~~1.4%, each as compared to the ~~third~~first quarter of fiscal 2020. Our sales performance continued to benefit from growth in new customer acquisition and the re-engagement of lapsed customers, as well as a continuation of shifting consumer behavior trends from the COVID-19 pandemic as customers focused on the care of their homes, land, and animals. These factors all led to an increase in comparable2021. Comparable store sales ~~across all major product categories, driven by~~growth reflects robust ~~growth~~demand for everyday merchandise, including consumable, usable, and edible ("C.U.E.") products and ~~solid demand for summer~~strength in winter seasonal ~~categories. All geographic regions of~~goods, partially offset by a slower start to the ~~Company had positive comparable store sales growth.~~spring selling season. In addition, the Company’s e-commerce sales also experienced double-digit percentage growth compared to the ~~third~~first quarter of fiscal ~~2020.~~2021.

In addition to comparable store sales growth for the ~~third~~first quarter of fiscal 2022, sales from stores open less than one year were $77.8 million for the first quarter of fiscal 2022, which represented 2.8 percentage points of the 8.3% increase over first quarter fiscal 2021 net sales. For the first quarter of fiscal 2021, sales from stores open less than one year were ~~$70.3~~$82.4 million, ~~for the third quarter of fiscal 2021,~~ which represented ~~2.7~~4.2 percentage points of the ~~15.8%~~42.5% increase over ~~third~~first quarter fiscal 2020 net sales. For the third quarter of fiscal 2020, sales from stores open less than one year were $93.6 million, which represented 4.7 percentage points of the 31.4% increase over third quarter fiscal 2019 net sales.

The following table summarizes store growth for the fiscal three months ended ~~September 25, 2021~~March 26, 2022 and ~~September 26, 2020:~~March 27, 2021:

Fiscal Three Months Ended
Store Count Information: September 25,
2021 September 26,
2020
Tractor Supply
Beginning of period 1,955 1,881
New stores opened 12 23
Stores closed — —
End of period 1,967 1,904
Petsense
Beginning of period 174 180
New stores opened 3 3
Stores closed — —
End of period 177 183
Consolidated, end of period 2,144 2,087
Stores relocated 1 —

~~Page 20~~

~~Index~~


	Fiscal Three Months Ended
Store Count Information:	March 26, 2022	March 27, 2021
Tractor Supply
Beginning of period	2,003	1,923
New stores opened	—	21
Stores closed	—	—
End of period	2,003	1,944
Petsense
Beginning of period	178	182
New stores opened	1	2
Stores closed	(1)	(7)
End of period	178	177
Consolidated, end of period	2,181	2,121
Stores relocated	1	—

The following table indicates the percentage of net sales represented by each of our major product categories for the fiscal three months ended ~~September 25, 2021~~March 26, 2022 and ~~September 26, 2020:~~March 27, 2021:

Percent of Net Sales
Fiscal Three Months Ended
Product Category: September 25,
2021 September 26,
2020
Livestock and Pet 49 % 48 %
Seasonal, Gift and Toy Products 19 19
Hardware, Tools and Truck 22 23
Clothing and Footwear 5 5
Agriculture 5 5
Total 100 % 100 %


	Percent of Net Sales
	Fiscal Three Months Ended

Product Category:	March 26, 2022		March 27, 2021
Livestock and Pet	53	%	51	%
Hardware, Tools and Truck	19		21
Seasonal, Gift and Toy Products	17		18
Clothing and Footwear	8		7
Agriculture	3		3
Total	100	%	100	%

Gross profit increased ~~14.5%~~7.4% to ~~$1.09~~$1.06 billion for the ~~third~~first quarter of fiscal ~~2021~~2022 from ~~$948.0~~$983.8 million for the ~~third~~first quarter of fiscal ~~2020.~~2021. As a percent of net sales, gross margin in the ~~third~~first quarter of fiscal ~~2021~~2022 decreased 4129 basis points to ~~36.0%~~34.9% from ~~36.4%~~ 35.2%

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in the ~~third~~first quarter of fiscal ~~2020.~~2021. The decrease in gross margin as a percent of net sales was primarily driven by higher product cost inflation, higher transportation costs, and product mix shift towards C.U.E. ~~products. Partially offsetting the decrease was the Company’s~~products, which run at a slightly lower margin rate. Heightened transportation costs were caused by increased pressures on domestic and import freight, along with rising fuel prices. The Company's price management program ~~which~~and other key gross margin enhancing initiatives effectively offset a significant portion ~~of the inflation~~these gross margin driving pressures.

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased ~~13.3%~~7.8% to ~~$788.1~~$812.2 million for the ~~third~~first quarter of fiscal ~~2021~~2022 from ~~$695.8~~$753.2 million for the ~~third~~first quarter of fiscal ~~2020.~~2021. As a percent of net sales, SG&A expenses were ~~26.1%~~26.9%, ~~a 58~~an 11 basis point improvement over the prior year's ~~third~~first quarter. The improvement in SG&A as a percent of net sales was primarily attributable to more normalized incentive compensation and a moderation of COVID-19 response costs, as well as leverage in occupancy and other ~~fixed~~ costs from the increase in ~~our~~ comparable store ~~sales, along with lower COVID-19 pandemic response costs and decreased incentive compensation.~~sales. COVID-19 pandemic response costs in the ~~third~~first quarter of fiscal ~~2021~~2022 of approximately ~~$11.5~~$10.3 million consisted of sick pay, benefits, and other health and safety related expenses, as compared to approximately ~~$20.3~~$28.4 million in the ~~third~~first quarter of fiscal ~~2020.~~2021. The ~~leverage from these~~improvement in SG&A expenses was partially offset by ~~higher wage rates, incremental store labor hours, and~~ investments in store wages and the ~~Company’s~~Company's strategic ~~initiatives.~~growth investments.

Operating income for the ~~third~~first quarter of fiscal ~~2021~~2022 increased ~~17.9%~~6.0% to ~~$297.2~~$244.3 million compared to ~~$252.2~~$230.5 million in the ~~third~~first quarter of fiscal ~~2020.~~2021.

The effective income tax rate was ~~22.9%~~21.1% in the ~~third~~first quarter of fiscal ~~2021~~2022 compared to ~~22.2%~~18.8% in the ~~third~~first quarter of fiscal ~~2020.~~2021. The ~~primary driver for the~~ increase in the ~~Company's~~ effective income tax rate in the first three months of fiscal 2022 compared to the first three months of fiscal 2021 was ~~attributable~~primarily related to a ~~reduction~~decrease in ~~the~~a discrete incremental tax benefit associated with share-based compensation.

As a result of the foregoing factors, net income for the ~~third~~first quarter of fiscal ~~2021~~2022 increased ~~17.7%~~3.2% to ~~$224.4~~$187.2 million, or ~~$1.95~~$1.65 per diluted share, as compared to net income of ~~$190.6~~$181.4 million, or ~~$1.62~~$1.55 per diluted share, for the ~~third~~first quarter of fiscal ~~2020.~~2021.

During the ~~third~~first quarter of fiscal ~~2021,~~2022, we repurchased approximately ~~0.7~~1.4 million shares of the Company’s common stock at a total cost of ~~$141.3~~$296.2 million as part of our share repurchase program and paid quarterly cash dividends totaling ~~$59.4~~$103.5 million, returning ~~$200.6~~approximately $399.6 million to ~~stockholders.~~

~~Fiscal Nine Months Ended September 25, 2021 and September 26, 2020~~

Net sales increased 21.6% to $9.41 billion for the first nine months of fiscal 2021 from $7.74 billion for the first nine months of fiscal 2020. Comparable store sales for the first nine months of fiscal 2021 were $9.18 billion, a 18.5% increase as compared to the first nine months of fiscal 2020. Net sales increased 25.7% and comparable store sales increased 21.5% in the first nine months of fiscal 2020.

The comparable store sales results for the first nine months of fiscal 2021 included an increase in comparable average transaction value of 9.7% and an increase in comparable average transaction count of 8.8%, each as compared to the first nine months of fiscal 2020. Our sales performance continued to benefit from growth in new customer acquisition and the re-engagement of lapsed customers, as well as a continuation of shifting consumer behavior trends from the COVID-19 pandemic

~~Page 21~~

~~Index~~

as customers focused on the care of their homes, land, and animals. Additionally, consumer demand benefited from favorable weather conditions in the first quarter as well as government stimulus throughout the first nine months of fiscal 2021. These factors all led to a significant increase in comparable store sales across all major product categories, driven by strong demand for everyday merchandise, including C.U.E. products, as well as seasonal categories. All geographic regions of the Company had positive comparable store sales growth. In addition, the Company’s e-commerce sales also experienced growth compared to the prior year's first nine months.

In addition to comparable store sales growth for the first nine months of fiscal 2021, sales from stores open less than one year were $253.7 million for the first nine months of fiscal 2021, which represented 3.3 percentage points of the 21.6% increase over the first nine months of fiscal 2020 net sales. For the first nine months of fiscal 2020, sales from stores open less than one year were $264.0 million, which represented 4.3 percentage points of the 25.7% increase over the first nine months of fiscal 2019 net sales.

~~The following table summarizes store growth for the fiscal nine months ended September 25, 2021 and September 26, 2020:~~

Fiscal Nine Months Ended
Store Count Information: September 25,
2021 September 26,
2020
Tractor Supply
Beginning of period 1,923 1,844
New stores opened 44 61
Stores closed — (1)
End of period 1,967 1,904
Petsense
Beginning of period 182 180
New stores opened 6 6
Stores closed (11) (3)
End of period 177 183
Consolidated, end of period 2,144 2,087
Stores relocated 1 1

~~The following table indicates the percentage of net sales represented by each of~~ our ~~major product categories for the fiscal nine months ended September 25, 2021 and September 26, 2020:~~

Percent of Net Sales
Fiscal Nine Months Ended
Product Category: September 25,
2021 September 26,
2020
Livestock and Pet 48 % 48 %
Seasonal, Gift and Toy Products 21 21
Hardware, Tools and Truck 21 21
Clothing and Footwear 6 5
Agriculture 4 5
Total 100 % 100 %

Gross profit increased 21.4% to $3.36 billion for the first nine months of fiscal 2021 from $2.77 billion for the first nine months of fiscal 2020. As a percent of net sales, gross margin in the first nine months of fiscal 2021 decreased seven basis points to 35.7% as compared to the first nine months of fiscal 2020. The decrease in gross margin as a percent of net sales was primarily driven by higher transportation costs, product cost inflation, and the initial impact from the relaunch of the Company's Neighbor's Club loyalty program. Partially offsetting these factors were lower depth and frequency of sales promotions and less clearance activity, particularly in the first quarter of fiscal 2021, as well as benefits from the Company's price management program.

SG&A expenses, including depreciation and amortization, increased 19.9% to $2.34 billion for the first nine months of fiscal 2021 from $1.95 billion for the first nine months of fiscal 2020. As a percent of net sales, SG&A expenses improved 34 basis

~~Page 22~~

~~Index~~

points to 24.9% for the first nine months of fiscal 2021 from 25.2% for the first nine months of fiscal 2020. The improvement in SG&A as a percent of net sales was primarily attributable to leverage in incentive costs, occupancy, and other fixed costs from the increase in comparable store sales, as well as decreasing COVID-19 pandemic response costs as compared to the prior year period. COVID-19 pandemic response costs for the first nine months of fiscal 2021 of approximately $52.6 million consisted of sick pay, benefits, and other health and safety related expenses, as compared to approximately $82.4 million in the first nine months of fiscal 2020. The improvement was partially offset by higher wage rates, additional incremental store labor hours, and investments in the Company's strategic initiatives.

~~Operating income for the first nine months of fiscal 2021 increased 24.8% to $1.01 billion compared to $812.5 million in the first nine months of fiscal 2020.~~

The effective income tax rate was 21.9% in the first nine months of fiscal 2021 compared to 22.6% in the first nine months of fiscal 2020. The improvement in the effective income tax rate in the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020 was primarily related to a discrete incremental tax benefit associated with share-based compensation. The Company expects the full fiscal year 2021 effective tax rate to be in a range between 22.1% and 22.3%.

As a result of the foregoing factors, net income for the first nine months of fiscal 2021 increased 26.5% to $775.8 million, or $6.68 per diluted share, as compared to net income of $613.1 million, or $5.23 per diluted share, for the first nine months of fiscal 2020.

During the first nine months of fiscal 2021, we repurchased approximately 3.5 million shares of the Company’s common stock at a total cost of $598.0 million as part of our share repurchase program and paid quarterly cash dividends totaling $179.8 million, returning $777.8 million to stockholders.

Liquidity and Capital Resources

In addition to normal operating expenses and expenses associated with our COVID-19 response, our primary ongoing cash requirements are for new store expansion, existing store remodeling and improvements, store relocations, distribution facility capacity and improvements, information technology, inventory purchases, repayment of existing borrowings under our debt facilities, share repurchases, cash dividends, and selective acquisitions as opportunities arise.

Our primary ongoing sources of liquidity are existing cash balances, cash provided from operations, remaining funds available under our debt facilities, operating and finance leases, and normal trade credit. Our inventory and accounts payable levels typically build in the first and third fiscal quarters to support the higher sales volume of the spring and ~~cold weather~~cold-weather selling seasons, respectively.

~~The Company believes~~We believe that ~~its~~our existing cash balances, expected cash flow from future operations, funds available under ~~its~~our debt facilities, operating and finance leases, and normal trade credit will be sufficient to fund ~~its~~our operations ~~including expenses associated with COVID-19,~~ and ~~its~~our capital expenditure needs, including new store openings, existing store remodeling and improvements, store relocations, distribution facility capacity and improvements, and information technology improvements, through the end of fiscal ~~2021.~~2022 and through the next several fiscal years. We are not aware of any trends or events that would materially affect our capital requirements or liquidity.

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Working Capital

At ~~September 25, 2021,~~March 26, 2022, the Company had working capital of ~~$1.42 billion,~~$968.6 million, which decreased ~~$93.0~~$217.0 million from December ~~26, 2020,~~25, 2021, and ~~increased $383.6~~decreased $436.3 million from ~~September 26, 2020.~~March 27, 2021. The shifts in working capital were attributable to changes in the following components of current assets and current liabilities (in millions):


		September 25, 2021		December 26, 2020		Variance		September 26, 2020		Variance			March 26, 2022		December 25, 2021		Variance		March 27, 2021		Variance
Current assets:	Current assets:											Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,111.7	$	1,341.8	$	(230.1)	$	1,112.0	$	(0.3)	Cash and cash equivalents	$	405.4	$	878.0	$	(472.6)	$	1,149.9	$	(744.5)
Inventories	Inventories	2,199.8		1,783.3		416.5		1,915.0		284.8		Inventories	2,568.2		2,191.2		377.0		2,084.7		483.5
Prepaid expenses and other current assets	Prepaid expenses and other current assets	149.6		133.6		16.0		136.1		13.5		Prepaid expenses and other current assets	185.6		164.1		21.5		146.2		39.4
Income taxes receivable	Income taxes receivable	6.8		—		6.8		7.8		(1.0)		Income taxes receivable	9.0		17.1		(8.1)		—		9.0
Total current assets	Total current assets	3,467.9		3,258.7		209.2		3,170.9		297.0		Total current assets	$	3,168.2	$	3,250.4	$	(82.2)	$	3,380.8	$	(212.6)
Current liabilities:	Current liabilities:											Current liabilities:
Accounts payable	Accounts payable	1,197.8		976.1		221.7		1,056.9		140.9		Accounts payable	$	1,341.6	$	1,155.6	$	186.0	$	1,181.9	$	159.7
Accrued employee compensation	Accrued employee compensation	122.0		119.7		2.3		120.4		1.6		Accrued employee compensation	49.1		109.6		(60.5)		68.1		(19.0)
Other accrued expenses	Other accrued expenses	408.9		324.8		84.1		274.2		134.7		Other accrued expenses	445.1		474.4		(29.3)		377.8		67.3
Current portion of long-term debt	Current portion of long-term debt	—		—		—		380.0		(380.0)		Current portion of long-term debt	—		—		—		—		—
Current portion of finance lease liabilities	Current portion of finance lease liabilities	4.2		4.6		(0.4)		4.4		(0.2)		Current portion of finance lease liabilities	4.0		3.9		0.1		4.7		(0.7)
Current portion of operating lease liabilities	Current portion of operating lease liabilities	312.3		298.7		13.6		294.8		17.5		Current portion of operating lease liabilities	359.8		321.3		38.5		303.2		56.6
Income taxes payable	Income taxes payable	0.8		19.9		(19.1)		1.9		(1.1)		Income taxes payable	—		—		—		40.2		(40.2)

Total current liabilities	Total current liabilities	2,046.0		1,743.8		302.2		2,132.6		(86.6)		Total current liabilities	$	2,199.6	$	2,064.8	$	134.8	$	1,975.9	$	223.7
Working capital	Working capital	$	1,421.9	$	1,514.9	$	(93.0)	$	1,038.3	$	383.6	Working capital	$	968.6	$	1,185.6	$	(217.0)	$	1,404.9	$	(436.3)

In comparison to December ~~26, 2020,~~25, 2021, working capital as of ~~September 25, 2021,~~March 26, 2022, was impacted most significantly by changes in cash and cash equivalents, inventories, and accounts payable.

•The decrease in cash and cash equivalents was primarily driven by uses of cash for share repurchases, capital expenditures to support strategic growth, and ~~cash~~ dividends to stockholders, partially offset by cash generated from operations.

•The increase in inventories ~~resulted primarily from the seasonal purchase of additional inventory to support higher sales volume of the cold weather selling season, as well as to support new store growth~~ and ~~the impact of inflation.~~

•~~The increase in accounts payable resulted from the purchase of additional inventory to support new store growth and strong sales volume trends.~~

In comparison to September 26, 2020, working capital as of September 25, 2021, was impacted most significantly by changes in inventories, accounts payable, other accrued expenses, and the current portion of long-term debt.

•The increase in inventories resulted primarily from the purchase of additional inventory to support new store growth as well as an increase in average inventory per store which principally reflects support for strong sales volume trends and the impact of inflation.

•~~The increase in~~ accounts payable resulted primarily from the purchase of additional inventory as part of the normal seasonal patterns to support ~~new store growth~~the spring selling season as well as the impact of inflation.

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Index

In comparison to March 27, 2021, working capital as of March 26, 2022, was impacted most significantly by changes in cash and ~~strong sales volume trends.~~cash equivalents, inventories, and accounts payable.

•The decrease in ~~the current portion~~cash and cash equivalents was primarily driven by uses of ~~long-term debt was related~~cash for share repurchases, capital expenditures to ~~the repayment of all short-term debt obligations, including the $350 million April 2020 Term Loan borrowing, which was executed in the prior year in order~~support strategic growth, and dividends to ~~strengthen liquidity and preserve~~stockholders, partially offset by cash ~~while navigating the COVID-19 pandemic. These borrowings were repaid in full in the fourth quarter of fiscal 2020 and the underlying loan agreements are no longer in effect.~~generated from operations.

•The increase in ~~other accrued expenses was driven~~inventories and accounts payable resulted primarily ~~by Company growth year-over-year as well as~~from heightened inventory needs in response to strong sales volume trends, the ~~timing~~impact of ~~payments~~inflation, and ~~accruals.~~additional inventory purchases to support new store growth.

~~Page 24~~

~~Index~~

Debt

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


		September 25, 2021		December 26, 2020		September 26, 2020			March 26, 2022		December 25, 2021		March 27, 2021
1.75% Senior Notes due 2030	1.75% Senior Notes due 2030	$	650.0	$	650.0	$	—	1.75% Senior Notes due 2030	$	650.0	$	650.0	$	650.0
3.70% Senior Notes due 2029	3.70% Senior Notes due 2029	150.0		150.0		150.0		3.70% Senior Notes due 2029	150.0		150.0		150.0
Senior Credit Facility:	Senior Credit Facility:							Senior Credit Facility:
February 2016 Term Loan		—		—		130.0
June 2017 Term Loan		—		—		80.0
March 2020 Term Loan		—		—		200.0
April 2020 Term Loan		—		—		350.0
November 2020 Term Loan	November 2020 Term Loan	200.0		200.0		—		November 2020 Term Loan	200.0		200.0		200.0
Revolving credit loans	Revolving credit loans	—		—		—		Revolving credit loans	—		—		—
Total outstanding borrowings	Total outstanding borrowings	1,000.0		1,000.0		910.0		Total outstanding borrowings	1,000.0		1,000.0		1,000.0
Less: unamortized debt discounts and issuance costs	Less: unamortized debt discounts and issuance costs	(14.1)		(15.7)		(0.7)		Less: unamortized debt discounts and issuance costs	(13.1)		(13.6)		(15.2)
Total debt	Total debt	985.9		984.3		909.3		Total debt	986.9		986.4		984.8
Less: current portion of long-term debt	Less: current portion of long-term debt	—		—		(380.0)		Less: current portion of long-term debt	—		—		—
Long-term debt	Long-term debt	$	985.9	$	984.3	$	529.3	Long-term debt	$	986.9	$	986.4	$	984.8

Outstanding letters of credit	Outstanding letters of credit	$	46.5	$	48.7	$	50.4	Outstanding letters of credit	$	52.8	$	52.9	$	60.3

For additional information about the Company’s debt and credit facilities, refer to Note 5 to the Condensed Consolidated Financial Statements. ~~Refer to Note 6 to the Condensed Consolidated Financial Statements for information about the Company’s interest rate swap agreements.~~

Operating Activities

Operating activities provided net cash of ~~$0.87 billion~~$59.1 million and ~~$1.00 billion~~$177.1 million in the first ~~nine~~three months of fiscal ~~2021~~2022 and fiscal ~~2020,~~2021, respectively. The ~~$133.2~~$118.0 million decrease in net cash provided by operating activities in the first ~~nine~~three months of fiscal ~~2021~~2022 compared to the first ~~nine~~three months of fiscal ~~2020~~2021 is due to changes in the following operating activities (in millions):


		Fiscal Nine Months Ended							Fiscal Three Months Ended
		September 25, 2021		September 26, 2020		Variance			March 26, 2022		March 27, 2021		Variance
Net income	Net income	$	775.8	$	613.1	$	162.7	Net income	$	187.2	$	181.4	$	5.8
Depreciation and amortization	Depreciation and amortization	194.7		158.6		36.1		Depreciation and amortization	77.6		60.1		17.5
Share-based compensation expense	Share-based compensation expense	35.7		27.0		8.7		Share-based compensation expense	12.3		12.3		—
Deferred income taxes	Deferred income taxes	15.0		(3.7)		18.7		Deferred income taxes	39.9		20.2		19.7
Inventories and accounts payable	Inventories and accounts payable	(194.8)		101.6		(296.4)		Inventories and accounts payable	(191.0)		(95.6)		(95.4)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(15.9)		(35.2)		19.3		Prepaid expenses and other current assets	(21.5)		(12.6)		(8.9)
Accrued expenses	Accrued expenses	77.0		100.9		(23.9)		Accrued expenses	(89.0)		3.7		(92.7)
Income taxes	Income taxes	(26.0)		(11.9)		(14.1)		Income taxes	8.1		20.3		(12.2)
Other, net	Other, net	10.3		54.6		(44.3)		Other, net	35.5		(12.7)		48.2
Net cash provided by operating activities	Net cash provided by operating activities	$	871.8	$	1,005.0	$	(133.2)	Net cash provided by operating activities	$	59.1	$	177.1	$	(118.0)

The ~~$133.2~~$118.0 million decrease in net cash provided by operating activities in the first ~~nine~~three months of fiscal 2022 compared to the first three months of fiscal 2021 ~~compared with the first nine months of fiscal 2020~~principally resulted from ~~decrease in our net operating assets and liabilities, partially offset by an~~the significant increase in ~~our net income, principally due to~~inventory and accounts payable as well as the timing of payments and accruals and a significant increase in inventory that remained in accounts payable in the prior year period; however, the increase was less significant in the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020 which resulted in a lower year-over-year amount of net cash provided by operating activities.accruals.

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Investing Activities

Investing activities used net cash of ~~$381.3~~$112.3 million and ~~$160.2~~$100.5 million in the first ~~nine~~three months of fiscal ~~2021~~2022 and fiscal ~~2020,~~2021, respectively. The ~~$221.1~~$11.8 million increase in net cash used in investing activities primarily reflects an increase in capital expenditures in the first ~~nine~~three months of fiscal ~~2021~~2022 compared to fiscal ~~2020.~~2021.

Investing activities, including capital expenditures, for the first ~~nine~~three months of fiscal ~~2021~~2022 and fiscal ~~2020~~2021 were as follows (in millions):


		Fiscal Nine Months Ended							Fiscal Three Months Ended
		September 25, 2021		September 26, 2020		Variance			March 26, 2022		March 27, 2021		Variance
Existing stores	Existing stores	$	213.2	$	30.6	$	182.6	Existing stores	$	(66.0)	$	(48.0)	$	(18.0)
Information technology	Information technology	77.0		72.6		4.4		Information technology	(18.4)		(30.9)		12.5
Distribution center capacity and improvements								Distribution center capacity and improvements	(13.8)		(8.3)		(5.5)
New and relocated stores and stores not yet opened	New and relocated stores and stores not yet opened	46.5		43.8		2.7		New and relocated stores and stores not yet opened	(12.5)		(12.0)		(0.5)
Distribution center capacity and improvements		36.9		11.6		25.3
Corporate and other	Corporate and other	8.8		2.7		6.1		Corporate and other	(1.7)		(1.5)		(0.2)
Total capital expenditures	Total capital expenditures	382.4		161.3		221.1		Total capital expenditures	(112.4)		(100.7)		(11.7)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	1.1		1.1		—		Proceeds from sale of property and equipment	0.1		0.2		(0.1)
Net cash used in investing activities	Net cash used in investing activities	$	381.3	$	160.2	$	221.1	Net cash used in investing activities	$	(112.3)	$	(100.5)	$	(11.8)

The increase in spending for existing stores in the first ~~nine~~three months of fiscal ~~2021~~2022 as compared to the first ~~nine~~three months of fiscal ~~2020~~2021 principally reflects our strategic initiatives related to store remodels, including internal space productivity and the outside side lot improvements. Spending in the first ~~nine~~three months of both fiscal ~~2021~~2022 and fiscal ~~2020~~2021 also includes routine refresh activity, as well as security enhancements.

The ~~increase~~decrease in spending for information technology ~~represents~~in the first three months of fiscal 2022 as compared to the first three months of fiscal 2021 is principally due to timing as we anticipate our spending for the year to be generally in line with the prior year. Expenditures for information technology represent continued support offor our omni-channel initiatives, ~~as well as~~ improvements in security and compliance, enhancements ~~and upgrades~~ to our customer loyalty program, mobility in our stores, and other strategic initiatives.

In the first ~~nine~~three months of fiscal ~~2021,~~2022, the Company opened 44no new Tractor Supply stores compared to 6121 new Tractor Supply stores during the first ~~nine~~three months of fiscal ~~2020.~~2021. The Company also opened ~~six~~one new Petsense ~~stores~~store during each of the first ~~nine~~three months of fiscal 2022 and fiscal 2021. Tractor Supply new store openings were delayed during the quarter by lingering impacts from the COVID-19 pandemic and challenges facing the construction industry. The new store expenditures in the first quarter of fiscal 2022 represent the remaining costs for stores that opened in the fourth quarter of 2021 and ~~fiscal 2020.~~the costs for new stores scheduled to open later in the year. We continue to expect to open approximately 75 to 80 new Tractor Supply stores and approximately 10 new Petsense stores during fiscal 2021. The timing of new store openings reflects some short-term delays, as a result of factors such as the COVID-19 pandemic, including local and state orders and constraints on labor and materials in the construction industry.2022.

The increase in spending for distribution center capacity and improvements in the first ~~nine~~three months of fiscal ~~2021~~2022 as compared to the first ~~nine~~three months of fiscal ~~2020~~2021 is related to ~~beginning~~the construction of a new distribution center in Navarre, Ohio, which is expected to be approximately 900,000 square ~~feet and is currently anticipated to be complete by the end of fiscal 2022.~~feet.

Our projected capital expenditures for fiscal ~~2021~~2022 are currently estimated to be in a range of approximately ~~$550~~$625 million to ~~$600~~$675 million. The capital expenditures include ~~our new store growth plans for~~a plan to open approximately 75 to 80 new Tractor Supply stores, to remodel more than 150 stores, and to transform the side lots in approximately 100 locations, along with opening 10 new Petsense ~~stores, as well as~~stores. Additionally, we plan to begin construction in the ~~construction~~middle of ~~our~~fiscal 2022 on a new distribution center in ~~Navarre, Ohio. We also~~Maumelle, Arkansas, which is currently anticipated to be complete in late 2023. In addition, we plan to support our ~~strategic growth initiatives related to store remodels, space productivity, and side lot improvements in certain existing stores, as well as~~ continued improvements in technology and infrastructure at our existing stores and ongoing investments to enhance our digital and omni-channel capabilities to allow our team members to better serve our ~~customers.~~customers and to provide an even greater overall shopping experience.

Page 2620

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Financing Activities

Financing activities used net cash of ~~$720.6~~$419.4 million in the first ~~nine~~three months of fiscal ~~2021~~2022 compared to ~~providing~~using net cash of ~~$182.9~~$268.4 million in the first ~~nine~~three months of fiscal ~~2020.~~2021. The ~~$903.5~~$151.0 million change in net cash used in financing activities in the first ~~nine~~three months of fiscal ~~2021~~2022 compared to the first ~~nine~~three months of fiscal ~~2020~~2021 is due to changes in the following (in millions):


		Fiscal Nine Months Ended							Fiscal Three Months Ended
		September 25, 2021		September 26, 2020		Variance			March 26, 2022		March 27, 2021		Variance
Net borrowings and repayments under debt facilities		$	—	$	512.5	$	(512.5)

Repurchase of common stock	Repurchase of common stock	(598.0)		(263.2)		(334.8)		Repurchase of common stock	$	(296.2)	$	(253.4)	$	(42.8)
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	75.2		73.8		1.4		Net proceeds from issuance of common stock	7.9		58.7		(50.8)
Cash dividends paid to stockholders	Cash dividends paid to stockholders	(179.8)		(128.0)		(51.8)		Cash dividends paid to stockholders	(103.5)		(60.6)		(42.9)
Other, net	Other, net	(18.0)		(12.2)		(5.8)		Other, net	(27.6)		(13.1)		(14.5)
Net cash (used in)/provided by financing activities		$	(720.6)	$	182.9	$	(903.5)
Net cash used in financing activities								Net cash used in financing activities	$	(419.4)	$	(268.4)	$	(151.0)

The ~~$903.5~~$151.0 million change in net cash used in financing activities in the first ~~nine~~three months of fiscal 2022 compared to the first three months of fiscal 2021 ~~compared with the first nine months of fiscal 2020~~ is principally due to ~~actions taken~~an increase in total shareholder return via the first nine months of fiscal 2020 intended to strengthen our liquidity and preserve cash while navigating the COVID-19 pandemic, including borrowings under our debt facilities as well as a temporary suspension of our share repurchase ~~program.~~

In the first nine months of fiscal 2020, the Company's net borrowings under its debt facilities included the addition of the $200 million March 2020 Term Loan and the $350 million April 2020 Term Loan, each of which was repaid in full during the fourth quarter of fiscal 2020 as described in Note 5 to the Condensed Consolidated Financial Statements. The Company had no borrowing or repayment activity related to its debt facilities in the first nine months of fiscal 2021.

~~Repurchases~~ of common stock and cash dividends paid to stockholders and a decrease in net proceeds from the ~~first nine months~~issuance of ~~fiscal 2020 were impacted by~~common stock related to the ~~temporary suspension~~exercise of ~~our share repurchase program effective March 12, 2020 until November 5, 2020.~~stock awards.

Dividends

During the first ~~nine~~three months of fiscal ~~2021~~2022 and fiscal ~~2020,~~2021, 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 4, 2021~~January 26, 2022

~~0.52~~0.92

~~August 23, 2021~~February 21, 2022

~~September~~March 8, ~~2021~~2022

~~May 5, 2021~~

~~0.52~~

~~May 24, 2021~~

~~June 8, 2021~~

January 27, 2021

0.52

February 22, 2021

March 9, 2021

~~August 5, 2020~~

~~0.40~~

~~August 24, 2020~~

~~September 9, 2020~~

~~May 6, 2020~~

~~0.35~~

~~May 26, 2020~~

~~June 9, 2020~~

~~February 5, 2020~~

~~0.35~~

~~February 24, 2020~~

~~March 10, 2020~~

~~Page 27~~

~~Index~~

Share Repurchase Program

Page 21

Index

The following table provides the number of shares repurchased, average price paid per share, and total amount paid for share repurchases during the fiscal three ~~and nine~~ months ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020, respectively~~ (in thousands, except per share amounts):


		Fiscal Three Months Ended				Fiscal Nine Months Ended					Fiscal Three Months Ended
		September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020			March 26, 2022		March 27, 2021
Total number of shares repurchased	Total number of shares repurchased	744		—		3,462		2,853		Total number of shares repurchased	1,358		1,600
Average price paid per share	Average price paid per share	$	190.03	$	—	$	172.73	$	92.28	Average price paid per share	$	218.07	$	158.35
Total cash paid for share repurchases	Total cash paid for share repurchases	$	141,259	$	—	$	597,973	$	263,219	Total cash paid for share repurchases	$	296,180	$	253,409

Pending Acquisition

~~Off-Balance Sheet Arrangements~~

~~There have been no material changes in~~ The Company continues to work collaboratively with the ~~Company's off-balance sheet arrangements during~~Federal Trade Commission on the fiscal quarter ended September 25, 2021. The Company’s off-balance sheet arrangements are limited to outstanding letters of credit. Letters of credit allow the Company to purchase inventory, primarily sourced overseas, in a timely manner, and support certain risk management programs.transaction.

Significant Contractual Obligations and Commercial Commitments

For a description of the Company’s significant contractual obligations and commercial commitments, refer to Note 11 to the Consolidated Financial Statements included under Part II, Item 8 in our Annual Report on Form 10-K for the fiscal year ended December 25, 2021. The Company is building a new distribution ~~center~~centers in Navarre, Ohio and Maumelle, Arkansas, for which, ~~is expected to be approximately 900,000 square feet and is currently anticipated to be complete by the end~~as of ~~fiscal 2022. At September 25, 2021,~~March 26, 2022, the Company had contractual commitments of approximately ~~$93.8~~$32 million ~~related to~~and $0, respectively. As of March 26, 2022, there has been no other material change in the ~~construction of this new distribution center.~~information disclosed in the Annual Report on Form 10-K for the fiscal year ended December 25, 2021.

~~At September 25, 2021, there were $46.5 million of outstanding letters of credit under the Senior Credit Facility.~~

~~Page 28~~

~~Index~~

Significant Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial position and results of operations are based upon its Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make informed estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company’s significant accounting policies, including areas of critical management judgments and estimates, have primary impact on the following financial statement areas:


-			Inventory valuation
-			Self-insurance reserves
-			Impairment of long-lived assets
-			Impairment of goodwill and other indefinite-lived intangible assets

See the Notes to the Consolidated Financial Statements in our ~~2020~~ 2021 Form 10-K, for a discussion of the Company’s critical accounting policies. The Company’s financial position and/or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

New Accounting Pronouncements

For recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of ~~September 25, 2021,~~March 26, 2022, refer to Note 121 to the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

Page 22

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a description of the Company’s quantitative and qualitative disclosures about market risks, see Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" included in our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2020.~~25, 2021. As of ~~September 25, 2021,~~March 26, 2022, there has been no material change in this information.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management carried out an evaluation required by the Securities Exchange Act of 1934, as amended (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) as of ~~September 25, 2021.~~March 26, 2022. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September 25, 2021,~~March 26, 2022, our disclosure controls and procedures were effective.

Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 2923

Index

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of the Company's legal proceedings, refer to Note 109 to the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

The risk factors described in Part I, Item 1A “Risk Factors” in our ~~2020~~ 2021 Form 10-K should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes to our risk factors as previously disclosed in our ~~2020~~ 2021 Form ~~10-K.~~10-K. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Share repurchases were made pursuant to the share repurchase program, which is described under Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q. Additionally, the Company withholds shares from vested restricted stock units and performance-based restricted share units to satisfy employees’ minimum statutory tax withholding requirements. Stock repurchase activity during the ~~third~~first quarter of fiscal ~~2021~~2022 was as follows:

Period Total Number of Shares Purchased Average
Price Paid
Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar
Value of Shares That May Yet Be Purchased Under the Plans or Programs
June 27, 2021 - July 24, 2021 (a) 306,491 $ 185.30 306,472 $ 630,390,670
July 25, 2021 - August 21, 2021 (a) 248,242 188.12 242,872 584,697,803
August 22, 2021 - September 25, 2021 (a) 194,210 199.87 194,000 545,926,155
Total 748,943 $ 190.01 743,344 $ 545,926,155


Period		Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
December 26, 2021 - January 22, 2022	(a)	364,042	$	227.93	363,998	$	262,056,849
January 23, 2022 - February 19, 2022	(a)	755,161	218.00		634,255	2,123,852,488		(b)
February 20, 2022 - March 26, 2022	(a)	360,069	208.36		359,952	2,048,857,479
Total		1,479,272	$	218.10	1,358,205	$	2,048,857,479

(a) The number of shares purchased and average price paid per share includes ~~19, 5,370,~~44, 120,906, and ~~210~~117 shares withheld from vested stock awards to satisfy employees’ minimum statutory tax withholding requirements for the period of ~~June 27,~~December 26, 2021 - ~~July 24, 2021, July 25, 2021~~January 22, 2022, January 23, 2022 - ~~August 21, 2021,~~February 19, 2022, and ~~August 22, 2021~~February 20, 2022 - ~~September 25, 2021,~~March 26, 2022, respectively.

(b) On January 26, 2022 the Board authorized a $2.0 billion increase to its existing share repurchase program, bringing the total amount authorized to date under the program to $6.5 billion.

We expect to implement the balance of the share repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with regulations of the SEC and other applicable legal requirements. The timing and amount of any common stock repurchased under the program will depend on a variety of factors including price, corporate and regulatory requirements, capital availability, and other market conditions.

Any additional share repurchase programs will be subject to the discretion of our Board of Directors and will depend upon earnings, financial condition, and capital needs of the Company, along with any other factors which the Board of Directors deem relevant. The program may be limited, temporarily paused, or terminated at any time, without prior notice.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Page 24

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Item 5. Other Information

None.

Page 3025

Index

Item 6. Exhibits

Exhibit

31.1* Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1** Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

101* The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 25, 2021,~~March 26, 2022, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

104* The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 25, 2021,~~March 26, 2022, formatted in Inline XBRL (included in Exhibit 101).

* Filed herewith

** Furnished herewith

Page 3126

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			TRACTOR SUPPLY COMPANY

Date:	~~November 4, 2021~~May 5, 2022	By:	/s/ Kurt D. Barton
			Kurt D. Barton
			Executive Vice President - Chief Financial Officer and Treasurer
			(Duly Authorized Officer and Principal Financial Officer)

Page 3227


Derivatives Designated as Cash Flow Hedges	Balance Sheet Location	September 25, 2021		December 26, 2020		September 26, 2020

Interest rate swaps (long-term portion)	Other assets	$	465	$	—	$	—
Total derivative assets		$	465	$	—	$	—

Interest rate swaps (short-term portion)	Other accrued expenses	$	1,260	$	1,227	$	2,831
Interest rate swaps (long-term portion)	Other long-term liabilities	—		3,137		5,055
Total derivative liabilities		$	1,260	$	4,364	$	7,886


		Fiscal Three Months Ended				Fiscal Nine Months Ended
	Financial Statement Location	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Amount of gains/(losses) recognized in OCI during the period	Other comprehensive income/(loss)	$	278	$	629	$	3,569	$	(8,153)