Tractor Supply TSCO · USD

Segment ReportingThe Company has one reportable segment which is the retail sale of products that support the rural lifestyle. The following table indicates the percentage of net sales represented by each major product category during fiscal 2025, 2024, and 2023: Percent of Net SalesFiscal YearProduct Category:202520242023Livestock, Equine & Agriculture (a)27 %26 %27 %Companion Animal (b)24 24 25 Seasonal & Recreation (c)24 24 22 Truck, Tool & Hardware (d)15 16 16 Clothing, Gift & Décor (e)10 10 10 Total100 %100 %100 % Note: Net sales by major product categories for prior periods have been reclassified to conform to the current year presentation.(a)Includes livestock and equine feed & equipment, poultry, fencing, and sprayer & chemicals.(b)Includes food, treats and equipment for dogs, cats, and other small animals as well as dog wellness.(c)Includes tractor & rider, lawn & garden, bird feeding, power equipment, and other recreational products.(d)Includes truck accessories, trailers, generators, lubricants, batteries, and hardware and tools.(e)Includes clothing, footwear, toys, snacks, and decorative merchandise.The accounting policies of the retail segment are the same as those described in the Summary of Significant Accounting Policies included in Note 1 - Significant Accounting Policies. The Company’s Chief Operating Decision Maker (“CODM”) is identified as the President and Chief Executive Officer. The CODM assesses performance for the retail segment based on Net income as reported on the Company’s Consolidated Statements of Income. The CODM considers net income on a monthly basis when assessing performance of the segment. Net income is also used in competitive analysis by benchmarking to the Company’s competitors and establishing management’s compensation. The measure of segment assets is reported on the Company’s Consolidated Balance Sheets as total consolidated assets.

Commitments and ContingenciesContractual CommitmentsAt December 27, 2025, the Company had contractual commitments of approximately $198.2 million. Of this amount, $71.4 million relates to the construction of our distribution center in Nampa, Idaho and $37.5 million relates to the construction of new stores under the Company’s fee development program. Commitments related to new stores are generally due as construction progresses, with obligations extending through 2026.The remaining $89.3 million in obligations is related to strategic investments related to information technology systems and advertising. The majority of these agreements are due within 3 years and are recorded as liabilities when the goods are received or the services are rendered. In addition, the Company had $293.7 million legally binding minimum lease payments for leases signed, but not yet commenced.Letters of CreditAt December 27, 2025, there were $78.6 million outstanding letters of credit. LitigationThe Company is involved in various litigation matters arising in the ordinary course of business. The Company believes that, based upon information currently available, any estimated loss related to such matters has been adequately provided for in accrued liabilities to the extent probable and reasonably estimable. Accordingly, the Company currently expects these matters will be resolved without material adverse effect on its consolidated financial position, results of operations or cash flows. However, litigation and other legal matters involve an element of uncertainty. Future developments in such matters, including adverse decisions or settlements or resulting required changes to the Company’s business operations, could affect our consolidated operating results when resolved in future periods or could result in liability or other amounts material to the Company’s Consolidated Financial Statements.

DebtThe following table summarizes the Company’s outstanding debt as of the dates indicated (in millions):December 27, 2025December 28,20245.25% Senior Notes$750.0 $750.0 1.75% Senior Notes650.0 650.0 3.70% Senior Notes150.0 150.0 Senior Credit Facility:Revolving Credit Facility230.0 300.0 Total outstanding borrowings1,780.0 1,850.0 Less: unamortized debt discounts and issuance costs(15.0)(18.0)Total debt1,765.0 1,832.0 Less: current portion of long-term debt— — Long-term debt$1,765.0 $1,832.0 Outstanding letters of credit$78.6 $74.1 5.25% Senior Notes due 2033On May 5, 2023, the Company completed the sale of $750 million aggregate principal amount of its 5.25% Senior Notes. The entire principal amount of the 5.25% Senior Notes is due in full on May 15, 2033. Interest is payable semi-annually in arrears on each May 15 and November 15. The terms of the 5.25% Senior Notes are governed by an indenture dated as of October 30, 2020 between the Company and Regions Bank, as trustee, as amended and supplemented by a second supplemental indenture dated as of May 5, 2023 (the “Second Supplemental Indenture”) between the Company and Regions Bank, as trustee.The 5.25% Senior Notes are senior unsecured debt obligations of the Company and rank equally with the Company’s other senior unsecured liabilities and senior to any future subordinated indebtedness of the Company. The 5.25% 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 February 15, 2033 (three months prior to the maturity date of the 5.25% Senior Notes), the Company has the right, at its option, to redeem the 5.25% 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 5.25% 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 February 15, 2033, the Company has the right, at its option, to redeem the 5.25% 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 5.

Income TaxesThe provision for income taxes consists of the following (in thousands):Fiscal Year 202520242023Current tax expense: Federal$212,791 $292,895 $270,024 State28,100 39,133 45,093 Total current tax expense240,891 332,028 315,117 Deferred tax expense (benefit):Federal45,000 (14,264)12,000 State16,267 (6,064)(1,941)Total deferred tax expense (benefit)61,267 (20,328)10,059 Total provision for income taxes$302,158 $311,700 $325,176 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities are as follows (in thousands): December 27, 2025December 28, 2024Tax assets: Inventory valuation$39,048 $36,312 Accrued employee benefits costs23,107 19,409 Operating lease liabilities1,006,509 875,226 Deferred compensation15,657 14,218 Workers' compensation insurance17,608 16,715 Income tax credits16,179 20,230 Amortization— 22,424 Depreciation22,319 21,774 Other49,706 50,133 Total deferred tax asset1,190,133 1,076,441 Tax liabilities: Operating lease right-of-use assets(956,793)(836,610)Depreciation(237,666)(219,856)Amortization(36,924)— Other(31,584)(25,467)Total deferred tax liability(1,262,967)(1,081,933)Net deferred tax liability$(72,834)$(5,492)The Company has evaluated the need for a valuation allowance for all or a portion of the deferred tax assets. The Company believes that all of the deferred tax assets will more likely than not be realized through future earnings. The Company had state tax credit carryforwards of $18.2 million and $23.3 million as of December 27, 2025 and December 28, 2024, respectively, with varying dates of expiration through 2050. The Company provided no valuation allowance as of December 27, 2025 and December 28, 2024 for state tax credit carryforwards, as the Company believes it is more likely than not that all of these credits will be utilized before their expiration dates.A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows (in thousands):Fiscal Year 202520242023U.S. federal statutory tax rate$293,631 21.0 %$296,717 21.0 %$300,804 21.0 %State and local income taxes, net of federal income tax effects (a)32,807 2.4 25,327 1.8 32,931 2.3 Tax credits(19,775)(1.4)(7,268)(0.5)(6,743)(0.5)Nontaxable or nondeductible items1,432 0.1 (4,040)(0.3)(4,956)(0.

LeasesThe Company leases the majority of its retail store locations, certain distribution sites, its Merchandise Innovation Center, and certain equipment. The leases have varying terms and expire at various dates through 2046. Store leases typically have initial terms of between 10 years and 20 years, with two to four optional renewal periods of five years each. The exercise of lease renewal options is at our sole discretion. The Company has included lease renewal options in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes, and insurance costs) together with non-lease components (e.g., fixed payment common-area maintenance) as a single component for all classes of underlying assets. Certain lease agreements require variable payments based upon actual costs of common-area maintenance, real estate taxes, and insurance. Further, certain lease agreements require variable payments based upon store sales above agreed-upon sales levels for the year and others require payments adjusted periodically for inflation. Variable lease costs are expensed as incurred. As substantially all of our leases do not provide an implicit rate, we estimate our collateralized incremental borrowing rate based upon a Company specific credit rating and yield curve analysis at commencement or modification date in determining the present value of lease payments.The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. Short-term lease costs during the periods presented were immaterial.In addition to the operating lease right-of-use assets presented on the Consolidated Balance Sheets, assets, net of accumulated amortization, under finance leases of $31.4 million and $25.8 million are recorded within the Property and equipment, net line on the Consolidated Balance Sheets as of December 27, 2025 and December 28, 2024, respectively.

The following table summarizes the future maturities of the Company’s lease liabilities (in thousands):Operating Leases (a)Finance LeasesTotal2026$619,197 $6,525 $625,722 2027594,384 6,463 600,847 2028553,5566,337559,8932029509,4915,978515,4692030455,2124,661459,873After 20302,564,86411,2612,576,125Total lease payments5,296,70441,2255,337,929Less: Interest(1,154,957)(5,077)(1,160,034)Present value of lease liabilities$4,141,747 $36,148 $4,177,895 (a) Operating lease payments exclude $293.7 million of legally binding minimum lease payments for leases signed, but not yet commenced.

Acquisition of AllivetOn December 30, 2024, the Company completed its acquisition of Allivet, an online pet pharmacy. Pursuant to the agreement governing the transaction, the Company acquired 100% of the equity interest in Allivet for a purchase price of $135.0 million, which excludes adjustments for working capital, acquired cash, and other transaction related payments. The acquisition was financed with cash on hand from the balance sheet.Allocation of the Purchase PriceThe Company has applied the acquisition method of accounting for the Allivet acquisition, in accordance with Accounting Standards Codification 805 “Business Combinations,” with respect to the identifiable assets and liabilities of Allivet which have been measured at estimated fair value as of the date of the business combination.The aggregate purchase price noted above was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date, primarily using Level 2 and Level 3 inputs. Level 2 and Level 3 inputs are described in further detail in Note 1 - Significant Accounting Policies. These fair value estimates represent management’s best estimate of future cash flows (including sales, cost of sales, income taxes, etc.), discount rates, competitive trends, market comparables, and other factors. Inputs used were generally determined from historical data supplemented by current and anticipated market conditions and growth rates.The amount of consideration transferred that exceeds the fair value of the identifiable assets, net of liabilities, is recorded as goodwill, which is indicative of the expected synergies the acquisition of Allivet will bring to the Company’s portfolio offering for companion animal, equestrian, and livestock customers, and the additional growth opportunities expected to open up as a result of acquiring Allivet.The final fair value determination of the identifiable assets acquired and liabilities assumed was completed in the third quarter of fiscal 2025. The following table sets forth the final purchase price allocation of Allivet’s net assets acquired on December 30, 2024.

Cybersecurity is among the most critical risks to the Company. For many activities important to its business, the Company depends on the confidentiality, integrity, and availability of information systems and data, some of which are provided or managed by third parties. The Company’s Information Security and Privacy teams reduce first and third-party risk by maintaining a proactive security posture aligned with current threats, detecting cybersecurity events and responding quickly, and building procedures to rapidly recover. Internal and third-party risks are reviewed, monitored, and managed by the Company’s Cybersecurity and Privacy teams, audited by an Internal Audit team and various external experts, and tracked within an Enterprise Risk Management framework. The Company regularly engages third-party experts to assess the effectiveness of its cybersecurity programs. Biennially, an external independent consultancy team conducts a comprehensive review of the Company’s cybersecurity program using the NIST Cybersecurity Framework. Targeted assessments are conducted regularly by internal and third-party experts to ensure compliance with specific federal and state laws and regulations. Additionally, the Company is assessed annually by an independent third party for compliance with the PCI-DSS standard, for which the Company receives an attestation of compliance.The Company’s processes for identifying and managing first and third-party risks from cybersecurity threats include:•Continuous monitoring of the Company’s systems and network for cybersecurity events;•Regular testing of the Company’s Security Incident Response Plan, Business Continuity plans, and Disaster Recovery plans;•Required annual security training for team members with access to Company email, as well as tailored training for team members in more sensitive roles (and periodic testing to ensure the security training is effective).The Company’s security awareness program seeks to create a culture of shared responsibility for the security of sensitive data and systems. This is accomplished through mandatory annual security training for team members with access to Company email as well as tailored training for team members in more sensitive roles. Periodic testing ensures the training is effective. In addition, all team members have access to a variety of training materials on security topics through the Company’s training management system.