Good morning, ladies and gentlemen, welcome to Tractor Supply Company's conference call to discuss fourth quarter and fiscal year 2022 results. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. We ask that all participants limit themselves to one question and return to the queue for additional questions. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Tractor Supply Company. As a reminder, this call is being recorded. The host for today's call is Mrs. Mary Winn Pilkington, Senior Vice President of Investor and Public Relations for Tractor Supply Company. First up is a year-end video. Mary Winn, I will now pass the call back to you. Thank you, operator. Good morning, everyone, thanks for joining us. I hope you enjoyed watching the video of Tractor Supply's year-end review. On the call today are Hal Lawton, our CEO, and Kurt Barton, our CFO. After our prepared remarks, we'll open the call up for your questions. Seth Estep, our EVP and Chief Merchandising Officer, will join us for the question and answer session. Please note that we've made available a supplemental slide presentation on our website to accompany today's earnings release. Let me reference the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. This call may contain certain forward-looking statements that are subject to significant risk and uncertainties, including the future operating and financial performance of the company. In many cases, these risks and uncertainties are beyond our control. Although the company believes the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct, and actual results may differ materially from expectations. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statement are included at the end of the press release issued today and in the company's filings with the Securities and Exchange Commission. The information contained in this call is accurate only as of the date discussed. Investors should not assume that statements will remain operative at a later time. Tractor Supply undertakes no obligation to update any information discussed in this call. Given the number of people who want to participate, we respectfully ask that you limit yourself to one question. If you have additional questions, please feel free to get back in the queue. I appreciate your cooperation. We will be available after the call for follow-up. Thank you for your time and attention this morning. It's my pleasure to turn the call over to Hal. Thanks, Mary Winn, good morning, everyone, and thank you for joining our call this morning. I think the opening video was a great recap of the highlights of a record year for Tractor Supply. Year-end is when we reflect on our accomplishments, and I'm pleased to share the results from the team in 2022. We had sales growth of 11.6% and diluted earnings per share growth of almost 13%, and this is on top of a record performance in 2021. We had solid market share gains across all our product categories, and these gains continue to contribute materially to our sales growth. At Tractor Supply, it all starts with the team, and my sincere thanks and appreciation goes out to the more than 50,000 team members of Tractor Supply who work diligently every day to live our mission and values. Regardless of the operating challenges throughout the year, and really over the last three years since we entered the pandemic, the team has delivered impressive results while also making significant progress on our Life Out Here strategy. I commend and thank the team for stepping up to every challenge that has come at us over this time period. Our team plus our business model are the reasons why we have a record of consistent and stable growth across all economic environments. With this year's results, we've now posted three consecutive years of exceptional sales growth. The highlight of this phenomenal track record continues to be the consistency of our results and the broad-based strength of our performance. Including new stores in the 53rd week, our revenue on a three-year basis has increased about 70% with a three-year comp stack of 46.5%. Over the same period of time, we've invested nearly $1.7 billion in our stores, distribution centers, technology, and other strategic initiatives as part of our Life Out Here strategy. We also have significantly improved our operating capabilities, including relaunching our Neighbor's Club program, creating our Field Activity Support Team, expanding our mobile footprint, and delivering on the increased volume of our consumable, usable, and edible products. We've remained focused on introducing new capabilities, improving the shopping journey, and ensuring we have scalable platforms, all with the underlying goal to be the dependable supplier that our customers count on. As a company, we hit several significant billion-dollar milestones in 2022. We grew our sales to a record $14.2 billion, increased net income to over $1 billion, achieved $1 billion in private label credit card sales, and returned more than $1 billion in capital to shareholders for the second consecutive year. This culminated with diluted earnings per share of $9.71. Turning to our fourth quarter and fiscal 2022 performance, our business continues to be incredibly resilient and the quarter unfolded much like we anticipated. Albeit, comp sales performance was stronger than forecast as the late December winter storm provided a comp sales lift of approximately two percentage points. Excluding the impact of the winter storm, importantly, our underlying results were in line with the high end of our expectations for the quarter. Let's go through some of the highlights for the quarter and the fiscal year. For the fourth quarter, our comparable store sales growth was 8.6%, and it was driven by strong ticket growth of 6.3% and transaction count increase of +2.3%. Importantly, even without the winter storm benefit, our comp transactions would have been positive for the quarter. All months of the quarter, comps positive. October and December were our strongest comp sales months. Both two- and three-year comp stacks were relatively consistent across the quarter. On e-commerce, it achieved mid-single-digit positive sales growth, and we continued to build out our One Tractor capabilities. As of year-end, the Tractor Supply app has had over 4.4 million downloads since it was launched mid-2020. For the seventh consecutive quarter, we continued to see our consumable, usable, and edible products outperform our overall comp sales results. This is the fourth consecutive quarter for C.U.E. to run at about three times the rate of overall comp sales growth. This strong performance was driven by dry dog food as well as feed for poultry, equine, and wild birds. As we've talked about many times, C.U.E. is of our structural advantages, and the products represent the strength of our core business, and they're what drive trips to our stores. Our outperformance in year-round categories offset the declines in big-ticket categories, and we continue to gain share across our categories, both online and in store. Shifting now to Neighbor's Club. Our Neighbor's Club membership exceeded 28 million members and represented nearly 75% of our sales for the year. Neighbor's Club is successfully helping us migrate customers to a higher threshold of spending with us. During the quarter, we reached a new record in the number of high-value customers. Overall, our best customers are shopping with us more frequently and spending more money per transaction. On Petsense, the rebranding of Petsense to Petsense by Tractor Supply, along with our expansion of our Neighbor's Club program to Petsense by Tractor Supply, is really resonating with our customers. This expansion is allowing us to deepen relationships with existing customers in our enterprise and help attract new pet customers to both brands. Our customers' response to these initiatives is very encouraging, with Neighbor's Club membership already representing nearly 50% of sales at Petsense. During the quarter, we launched TSC Visa Credit Card. This new co-brand credit card allows our customers to earn more on their everyday purchases, both in store and anywhere Visa is accepted. This marks exciting progress on our journey to drive sales, build loyalty, and reduce tender expense through our credit offerings. As I mentioned earlier, this past year, we crossed over $1 billion in private label credit card sales. For the fourth consecutive quarter, our overall customer satisfaction score hit a new all-time high as we continue to invest in our team to provide best-in-class customer service. Our team continued to make advancements in our supply chain through the expansion of our mixing centers to a total now of 15, as well as the grand opening of our 9th distribution center just last week. During the quarter, we also broke ground on our 10th distribution center in Maumelle, Arkansas, to support for the higher volumes of our existing stores, the continued build-out of our new stores, as well as the acquisition of Orscheln. Our supply chain continues to be a competitive advantage for us. In 2022, we moved more than 8 billion pounds of consumable, usable, and edible products through our supply chain as we are the world's largest seller of bagged feed and food for livestock and companion animals. Our scale and reach provide us with a cost to serve that is lower than our competition. We continue to advance on our commitment to be stewards of Life Out Here. We're making progress on our absolute carbon reduction goals to further reduce emissions from our operations by 20% by 2025 and by 50% by 2030 from our 2020 baseline. We are committed to achieving net zero emissions across all operations by 2040. In 2022 of April, we announced an ambitious three-year water conservation goal to conserve 25 million gallons of water by 2025. These commitments to the climate and society reinforce our vision that a healthy environment, properly managed resources, and vibrant communities are key to secure and prosperous future for Life Out Here. Our efforts to enhance our sustainable business practices have been recognized by various third parties. We now have nearly 30% of our store base that are in our Project Fusion layout. Our Garden Center build-out is now active in over 300 locations. With nearly 1,800 team members, our Field Activity Support Team has made powerful contributions to our in-stock performance and execution of our sales-driving initiatives. We continue to be pleased with the strategic benefits and financial returns of these store-level investments. This was a year that we made significant progress on our Life Out Here strategy. Building on our performance for 2022, our outlook for 2023 is right in line with our long-term guidance. Kurt will share more details on our outlook as well as more details on our performance in 2022 in just a moment. Now shifting a bit to 2023. As we plan for the year, we anticipate continuing to operate in an ever-challenging and changing macro environment. Our operating assumption is that the economy in the near to medium term will remain resilient with flat to modestly positive real growth. Consumers continue to tap pent-up savings to support spending. We expect consumers will continue to be judicious in their spend but resilient while prioritizing needs over discretionary. We believe inflation has peaked but will remain sticky as we move through the year. It is our view that an orderly loosening of the labor market will be a key determiner of the country's ability to return our economy to sustainable conditions in the second half and 2024. The effects of secondary markets on our consumer spending in areas such as housing, agriculture, and oil markets are expected to be collectively neutral and individually modest. Whatever economic environment plays out this year or any year for that matter, we're confident that our business will remain resilient and build on our strong track record of consistent and stable growth across all economic environments. Tractor Supply is a unique, highly differentiated retailer. We are the leader in a large fragmented market. We're a needs-based business that is tailored to the out here lifestyle. Our customers have a passion for the out here lifestyle and over-index with homeowners, landowners, pet owners, and animal owners. We live our mission and values. Our culture defines our relationship with our customers. We're celebrating our eighty-fifth anniversary this year. As we begin the year, we take great pride in our past and are equally excited about our future. With that, I'll turn the call over to Kurt. Thank you, Hal, and hello to everyone on the call. Let me build on Hal's sentiment for 2022. As we started out the year, we anticipated that our business would continue to exhibit consistent performance as we have a proven business model that has stood the test of time. The team delivered against our goals and exceeded our expectations. The impact of the 53rd week on our performance is detailed in our press release. To recap, the 53rd week added about $225 million to our net sales in the fourth quarter, representing 6.8 points of our net sales growth. On a full year basis, it represented 1.8 points of the 11.6% growth year-over-year. Diluted EPS benefited by $0.16 for the quarter and the year. For the fourth quarter, all regions of the country once again delivered positive sales comp. All months were comp positive. For the cadence of the quarter, our comp store sales were performing at the high end of our outlook as we moved into mid-December. As Winter Storm Elliott moved across the country, our sales accelerated given the storm's impact on our customers' needs for heat, insulated outerwear, livestock feed and forage, and some load up of other C.U.E. products. As Hal shared, we estimate the storm provided about two percentage point benefit to our comp sales. Much like any emergency response events such as hurricanes, the profitability of these sales from winter storm events of this magnitude is lower due to the mix of products and higher incremental operating costs. Our commitment to being the dependable supplier for Life Out Here was exhibited during this historic storm. Looking back, when excluding the December winter storm, comparable store sales have been remarkably consistent across all four quarters of the year. Similar to trends through the year, retail price inflation contributed about 11 points to our comparable store sales in Q4 as the team continues to navigate the ongoing cost pressures across the supply chain. The comparable average ticket growth of 6.3% benefited from inflation, partially offset by a shift in sales mix to needs-based consumables versus the larger ticket items. Demand for C.U.E. categories was nearly three times the chain average, while big ticket sales performance was down mid-single digits. We did see strong performance in winter needs-based items such as heaters, snow throwers and log splitters. The performance in these big ticket categories somewhat offset the declines we saw in more discretionary categories like utility and recreational vehicles and trailers. Moving on to gross margin. For the fourth quarter, our gross margin improved by 28 basis points to an even 34% of sales. Our price management actions and other margin driving initiatives were able to offset the pressures from year-over-year product cost inflation, higher transportation costs and product mix due to the strength of C.U.E. categories. During the quarter, we experienced a significant moderation in the rate of price increases from our vendors but by no means are we seeing deflation. Our promotional activity was in line with the prior year, and we are seeing moderation in transportation costs that we expect to flow through in 2023. Of note, it's our belief that transportation costs most likely peaked in the fourth quarter. As a percent of net sales, SG&A expenses, including Depreciation and Amortization, increased 14 basis points year over year to 25.1%. As we indicated in Q3, this increase was primarily attributable to three factors. One, the impact of transaction expenses and early integration costs associated with our acquisition of Orscheln Farm and Home. Two, our strategic growth initiatives, including Depreciation and Amortization. Three, our investments in team member compensation and benefits. These items were partially offset by a reduction in COVID-19 response costs and leverage in occupancy and other costs from the increase in comparable store sales. Diluted EPS was $2.43, an increase of 25.9% from the fourth quarter of last year. Our balance sheet remains incredibly strong. At the end of the quarter, merchandise inventories were $2.7 billion, representing an 18% increase year-over-year in average inventory per store. Overall, we continue to believe that our inventory position is in good shape. Today, we believe we are better positioned to drive sustainable long-term growth than we were before the pandemic. Our structural tailwinds such as rural revitalization, homesteading, self-reliance and pet ownership continue to benefit us. Our Life Out Here strategic investments have made us stronger. Adjusting for the impact of the 53rd week, our outlook for 2023 is right in line with our long-term targets as we continue to see the power of compounding from our compelling top-line growth, operating margin outlook and consistent capital return to shareholders through the dividends and share repurchases. For fiscal 2023, we are forecasting net sales of $15 billion-$15.3 billion, including at least $300 million in sales from Orscheln. Our outlook marks another milestone in our performance as annual sales are forecasted to be above $15 billion. Comparable store sales growth is anticipated to be in the range of 3.5%-5.5%. We expect gross margin expansion of about 20- 40 basis points from supply chain benefits and a moderation in both product cost increases and the mix impact of C.U.E.. We anticipate SG&A will deleverage modestly due to a few factors. Depreciation and Amortization is anticipated to increase by 17%-20% relating to our strategic growth initiatives. We opened our ninth distribution center just this month. As a reminder, the operating costs for the new DC are reflected in SG&A, while the supply chain benefits are reflected in gross margin. We expect the incremental cost to pressure SG&A by approximately 15- 20 basis points. The benefit in gross margin will not completely offset this pressure since it takes time for the new facility to fully ramp to maturity and realize the supply chain benefits. Lastly, the integration of Orscheln Farm and Home is expected to impact SG&A by approximately 5 basis points. These factors are partially offset by the normalization incentive compensation and leverage in occupancy and other operating costs from the increase in comparable store sales. For the year, we forecast an operating margin of 10.1%-10.3%. We are forecasting interest expense of approximately $55 million as we have increased borrowings to fund our capital allocation. We plan to maintain a healthy leverage ratio of two times or below. We expect our effective tax rate to be in the range of 22.7%-23%. We continue to expect the Orscheln acquisition to be accretive to diluted earnings per share by at least $0.10 in 2023. All in, diluted EPS is forecast in a range of $10.30-$10.60. We continue to believe the best way to look at our business is not by the quarter but by the halves of the year. As you model 2023, I wanna point out a few things that will impact comparability, I'd like to give a little color on the flow across quarters. From a sales perspective, we are planning for all four quarters to have comp sales performance generally within our guidance range. We anticipate retail price inflation to benefit comp sales by 3- 5 points, with the benefit being higher in the first half than the second half as inflation pressures begin to moderate. We are planning for positive comp transactions in 2023. As to earnings, we expect our EPS growth to be fairly balanced between first half and second half. There are a couple discrete items that will impact operating margins in certain quarters. The first quarter will likely be our toughest comparison from an operating margin rate perspective. Startup costs for the new distribution center will pressure the first quarter, while the supply chain benefits will not begin to be realized until the second quarter. Additionally, transportation costs are expected to continue to be higher year-over-year in Q1 and then begin to moderate through the remainder of the year, with the second half expected to see favorable comparisons. As a reminder, the Orscheln stores will be added to the comp store calculation in October when we cycle the acquisition date. Keep in mind the discrete items that impact our earnings comparability in 2023 are the lapping of the 53rd week benefit, partially offset by the accretion from the Orscheln acquisition. When adjusting for the 2022 benefit from the 53rd week and the 2023 accretion from the Orscheln acquisition, our outlook for 2023 is consistent with our long-term EPS guidance of 8%-11%. Capital expenditures are forecasted to be $700 million-$775 million, with about 80% for growth initiatives. We expect to open approximately 70 new Tractor Supply stores. We continue to be on track for 10- 15 Petsense store openings in 2023. Our new store pipeline continues to be solid. We expect to improve the cadence of openings in 2023 with more balance throughout the year. We remain committed to returning cash to shareholders through the combination of a growing dividend and share repurchases. For 2023, we anticipate share repurchases in a range of $575 million-$675 million, which is estimated to have a benefit of a net reduction in weighted average shares outstanding of approximately 2%. Our business model has stood the test of time and has proven to be resilient. While we are closely monitoring consumer behavior and the impact of economic growth on consumer demand, we believe that we are well-positioned for any consumer and economic environment. To wrap up, we're continuing to separate Tractor Supply from the competition. In prior cycles, we've made investments that strengthened the company. We believe the current environment is an opportunity for us to lean into our strength and further expand our lead for years to come. With that, I'll turn the call back over to Hal. Thank you, Kurt. As we celebrate our 85th anniversary this year, Tractor Supply is a business that continues to have significant opportunities for growth ahead of us. Our position in our customer spending is for stable, needs-based, and demand-driven product categories. We are in defensive product categories for the lifestyle our customers live. At the same time, we are playing offense to capture organic growth opportunities. We have idiosyncratic growth drivers that are separating us from the competition. As a company, three words that really summarize Tractor Supply's performance are one, consistent, two, reliable, and three, sustainable. I'd like to walk through these three words and share what I see as structural tailwinds across them to support our future performance. Let's start first with consistent performance. We have a track record of delivering positive sales growth for over 30 consecutive years. 30 of the last 31 years have had positive comp sales. We've had consistent traffic growth across economic cycles, and we're planning for positive traffic growth in 2023. Our marketplace has shown consistent growth for decades and decades. Our total addressable market of $180 billion continues to benefit from numerous trends that we believe are structurally sound. By all accounts, we are gaining substantial share in our market. For instance, our key product categories are driven by livestock feed for cattle, equine and poultry, and companion animal food. In addition to categories like heating fuel, wildlife feed, pest control, and lubricants, we're entering new product categories through our Garden Center transformations that open up new C.U.E. categories that provide a halo to the store as new and existing customers shop our expanded lawn and garden categories. Our stores with a fusion layout and Garden Center transformations are gaining more customers than the balance of the chain. In just over two years since we started our Life Out Here strategy, we have gained significant scale in our fusion remodel and the transformation of our side lots to Garden Centers. We have a substantial runway for growth ahead of us as we still have 70% of the chain to convert to the fusion layout and the opportunity for another 1,000+ Garden Center transformations. The comp lift for the fusion remodels continues to run in the mid-single digits. When we execute a combination fusion remodel and a Garden Center transformation of our side lot, we have a comp lift in the high single digits. These projects provide us with the opportunity to continue our track record of consistent growth. The second word I would use to describe Tractor Supply is reliable. We are a needs-based, demand-driven business, and these product categories differentiate Tractor Supply from the bulk of retail. Our customers count on us for the products they need to deliver Life Out Here. Since relaunching our Neighbor's Club program in April of 2021, we have increased our high-value customers by nearly 50%. Additionally, our high-value customers are shopping us more frequently and spending more money. Our retention rate for our high-value customers is about 80%, with our retention rate for our highest tier customers at over 95%. Our Neighbor's Club program is a true competitive advantage for Tractor Supply. Once our customer's in the flywheel of Neighbor's Club, their spending becomes much more reliable. Sustainable is the third key word to characterize our company. We've had tens of millions of new customers shop us the past three years. We have retained the majority of these customers, and a substantial portion have become active Neighbor's Club members. We've added over 13 million members since 2019, with more than 5 million in 2022 alone. These strong results position us for sustainable growth ahead. Another important customer cohort that supports the sustainability of our outlook are the millennial customers, and they continue to have more significant spending with us and in the years ahead of them. This group will make up nearly a quarter of the U.S. population by 2032, just 10 years from now. Our sales comps for millennials have outpaced non-millennials at Tractor Supply for five consecutive years. Millennials over-index in sales per customer, units per customer, and average ticket. We view the strength of our millennial customer not as a pull forward, but rather as a catch-up, as this group delayed family formation and the pandemic really shifted their behaviors to be much like prior generations. This cohort of the population is showing accelerated rates of home ownership and household formation. Today, 50% of millennials own homes versus 30% just a decade ago. While they may have started a little bit later, we see an inflection point in the pace of home ownership and household formation for millennials. We are focused on retaining these new millennial customers as our data shows that they are roughly double their spending at TSC in their second year of shopping. If they continue shopping with us for five years, we experience a threefold increase in transactions and sales per customer within five years of their initial purchase. Rural revitalization also continues to be a strong structural benefit for us. Millennials are increasingly choosing to move out here. This is not just a phenomenon of the pandemic, but rather a decade-long trend of net migration out of urban areas that skew disproportionately among this younger generation. The rural lifestyle appeals to millennials, as it offers greater affordability, safety, self-sufficiency, a slower pace, and the ability to pursue hobbies and passions. Many of the hobbies pursued by the millennials fit with our Out Here lifestyle. Tractor Supply enables passions and hobbies pursued by millennials. Whether it's a pursuit as simple as making memories with family and friends or caring for pets and animals or getting outside to hunt, fish, or camp or being more self-sufficient and sustainable, Tractor Supply serves a key resource in our local communities for millennials to come to for trusted advice and expertise. Our passion for the lifestyle connects with our customers and allows us to serve them at scale. These three words, consistent, reliable, and sustainable, allow us to be an earnings growth compounder on both the top line and bottom line. As I started my remarks this morning, year-end is when we reflect on our accomplishments, more importantly, this is a key moment to look ahead and to focus on the opportunities ahead of us. With our Life Out Here strategy, we have ignited Tractor Supply's next horizon of strong and sustainable growth. 2023 is poised to be another great year for Tractor Supply. With that, operator, we'd now like to open the line for questions. Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Kindly remember when you are selected to ask your question to mute the webcast on your end. Our first question comes from the line of Scot Ciccarelli with Truist. Scot, your line is now open. Hi, this is Joe Civello on for Scot Ciccarelli. Great quarter guys. I was just wondering if we could talk about your transaction growth you guys are projecting for 2023. Can you talk about how the expectations are driven by, you know, weaker comps, weather driven or other things like that, or potentially incremental visits driven by garden centers, Project Fusion remodels or the things you're implementing in the stores that's helping to drive growth? Thank you. Hey, good morning and thanks for your question. Appreciate you joining the call today. We're very pleased with the guidance we provided on our comp sales for 2023 to be between 3.5% and 5.5%. Very much in line with our long-term guidance range as well. As Kurt said in his prepared remarks, we expect it'll be a blend of transacts, positive comp transactions and ticket. We do expect inflation will be stronger in the first half but moderate in the second half. What I'd say more broadly is, you know, our market that we participate in continues to run reasonably in line with pounds kind of flat to low single digits growth. We are taking significant share in the marketplace. As we've said several times over the last three years, our sales growth, half of that can be attributable to share gain. We certainly are expecting that to continue in 2023. The share gain is really a composition of the competitive advantages that we have, or as well as the investments we're making in our Life Out Here strategy and the fact that we're reaching scale on a number of those now, particularly our Fusion and Garden Centers, they will continue to add material growth to our comps. Again, we're very positive on our outlook for 2023 and expect the momentum that we exited 2022 to continue into the year. Got it. Thanks. Our next question comes from the line of Karen Short with Credit Suisse. Karen, your line is now open. Hi. Thanks for taking my question. Good to talk to you again. Just two questions if I could blend them in. You know, just looking at your algorithm, obviously you're looking for sales growth just on a one-year basis to be lower than EBIT growth. I guess I would argue that's probably, Or sorry, sales growth to be higher than EBIT growth. I would look at that as a good thing because you are one of the few companies that have invested and not harvested, as it relates to the pandemic. Maybe just talk about that algorithm. Then the second question I just wanted to lump in there. You know, when you look at your mix by category, obviously I kind of look at it at about 26% is discretionary. How do you think about that going into potentially a weaker macro? Yeah. Hey, Liz. Good morning and thanks for taking the call. I'm sorry, Karen. Why did I write it beside Karen? I apologize, Karen. Hey, Karen. It's all right. How are you this morning? Hey. Good morning. You all are right beside each other. Your names alphabetically on my list. My apologies. Hey, Karen, good morning and thanks for your question and for joining the call. On the sales growth, as you said, we are in an investment cycle in our business. The thing that we're excited about is that, you know, we're able to grow earnings as we did last year, double digits. We're able to grow our sales as we did last year, double digits, even in the context of an of an earnings cycle. You know, we anticipate to continue to grow sales, you know, at a significant rate next year as well as our earnings at a significant rate, you know, next year, even inclusive of all the, you know, the capital expenditure and the kind of underlying D&A that comes along with that, as well as all the other investments we're making in the business. You know, we're very optimistic and confident in the outlook that we've provided. On the mix by category, we've roughly talked about discretionary being more like 15% of our business. Big ticket is kind of in the low double digits. There's a few other categories that would be plus or minus in that discretionary area as well. You know, I think the way we think about that business is that some categories will have continued to be negative in their comps. There's others when it's seasonally relevant that will be positive. An example of that is what Kurt articulated in his prepared remarks saying that, you know, our big-ticket sales were kind of mid-single-digit negative comps. It was really. There was two sets of categories in there. The kind of discretionary non-seasonal related ones were kind of negative double digits, you had ones that were seasonally relevant and there was a demand around those, say like log splitters and snow throwers that are also big-ticket and, you know, could be viewed as discretionary or in our kind of math for discretionary. Those blended together to drive a negative single digit, mid single digit comp. We think it'll play out that way much of this year. You know, as an example, as we get into the end of Q1 and early Q2 when we had the drought last year, that disproportionately affected, as we commented last year, things like riders. We expect those to come back as, you know, the drought is abating in many areas of the country, even in spite of, you know, the consumer shifting more towards needs-based, needs-based spend. Anyway, thanks Karen for joining the call. Appreciate the question. Thank you. Our next question comes from the line of Liz Suzuki with Bank of America. Liz, your line is now open. Great. Thank you. I don't mind being confused for Karen because she dresses better than I do, so I appreciate it. Thanks for your time. So the guidance you gave for 2023, you know, in terms of the operating margin. I guess, you know, it sounds like the investments in new DCs and in-store transformations and side lots are probably the factors that would keep that margin towards the lower end of the long-term guidance. What do you view as the opportunities for operating margin to get to the top end of that guidance over time? Hey, Liz. Good morning, and thanks for joining the call. As we said several times, last year and this year are our two biggest peaks in investments. As we talked about in our enhanced earnings call a couple of years ago, the first part of this five-year cycle that we're in for our Life Out Here strategy would be towards more the bottom end of our and middle end of our range. As we move towards the out years, call it 2024, 2025, 2026, we see opportunities to increment up on our op margin towards that higher end and kind of get back to a nice leverage across our P&L of, say, five or 10 basis points a year. You know, really the biggest determinant of the 10.1%-10.3% this year will just be the sales range. You know, if we're up more towards the 5.5%, we would expect to leverage more on some of our fixed costs and be more towards that 10.3%. If we're down more towards the 3.5%, we think we'll be more in that, you know, 10.1%-10.2% range, as there's a little less leverage on some of our fixed costs and, you know, we pull some other levers to kind of manage the business. Certainly as we look out towards the back half of this 5-year investment cycle, we see opportunities for our margin rate to increment up. Got it. Just a follow-up. You may have mentioned this, but in the outlook for 23, how many Project Fusion remodels and side lots do you have baked in? Yeah. The mix of our remodels in 2023 will be a little different than last year because of the Orscheln acquisition. This year as we, as we shared in our opening remarks, you know, it's kind of 70- 80-ish new stores that we'll open this year. We'll also be integrating the 81 Orscheln stores. Those will be kind of a, you know, basically a Fusion remodel. Then we'll do around 150 more Fusion remodels as well. That's in line with what we did this year, kind of in that 200-250 range. It's just the fact that 80 of those will be taken up by the Orscheln integration this year. We continue to be very excited about Fusion- Got it. All Got it. All right. Thanks, Hal. ... and very excited about our side lots. Yeah, I'm excited-. Go ahead, Liz to meet you next week. Thanks. Yeah. Perfect. Look forward to seeing you. Our next question comes from the line of Brian Nagel with Oppenheimer. Brian, your line is now open. Hi, good morning. Great quarter. Congratulations. I'll have two quick questions. I'll merge them into one. First off, with regard to the, so to say, the weather bump in sales late in Q4, you know, should we think about that as incremental demand or is that potentially this pull forward demand from what would have happened in Q1? The second question I have, Kurt, you know, you mentioned in your script, just that you're seeing the, I guess pricing, you know, price increases moderating. I guess, and that's from your suppliers. The question I have is, If that's occurring, what action is Tractor Supply taking? Are you maintaining your retail prices or are you actually adjusting your retail prices to account for those now moderating input costs? Thanks. Yeah. Hey, Brian. It's, I'll take the first part of it and then Kurt will take the second part. On the weather bump, we don't see that as pull forward from Q1. We see it, dominantly as just incremental in Q4. I'd go back to some of the comments we made, say, in our Q3 earnings call and our Q2 earnings call, where we said, you know, our business has been very consistent in that 5%-6% comp range all last year. As, as Kurt said in his prepared remarks, and I think I did as well, we were trending towards the high end of our comp guidance for Q4 when the storm hit and then that put us well over. You know, I'd equate it a bit to what we said. If the drought hadn't occurred, we think we would have been over our guidance. If we'd have had a better spring season, we think we would have been over our guidance for those quarters. You know, just get back to the point, our business is very consistent, very stable, very reliable right now in that kind of mid-single digits. Then if we get some good weather on top of that benefits us. You know, we get that benefit. That's what we saw in Q4. When the weather's bad, we're there for our customers and it drives some sales. Otherwise, you know, we continue to run very reliably and consistently in that, in that mid-single digit comps. Yeah. Brian, good morning. I'll just add to that. On that winter storm. We view it very much like a discrete event, like the hurricane events have been. You heard my commentary on there. The exciting thing though is with those type of events consistent with this storm is it introduces Tractor Supply as a needs-based business to other new customers. That's what we do, is we capitalize on that. We see it as part of our opportunity in 2023 as new footsteps into the business. A great opportunity from that one event as we continue to serve our markets in a significant widespread winter storm such as that. In regards to your question about prices abating and how we manage that, one is those prices will take time to work through the system, so we do very well at managing whether that be the product cost or the transportation to be able to manage as those flow through and balance between the competitive retail price that we have gaining market share and how much we actually take to the bottom line. Specifically, the biggest item in the gross margin benefit in 2023 is the easing of the transportation cost. As you look back even over the last two years, on our gross margin, we've been very specific as we've been able to find offsets or pass through some of those. The transportation cost has been the primary one where we've absorbed some of that. As those prices abate and ease through, it's a key contributor how we expect to see gross margin expansion throughout 2023. Thanks, guys. Very helpful. Appreciate it. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Simeon, your line is now open. Good morning, everyone. Nice results. My question, it's a couple parts, but it's one topic. It's how C.U.E. is comping three times the company average. If you could speak to, if you can, maybe the price benefit there or what's happening with the basket and the market share seems to be staggering because I don't think, you know, some of the items in that category are growing that fast. I'll flip it and say, why are you not converting or is it converting to the rest of the store? Are you seeing that conversion? It seems like it's a pretty good halo to have on one side of the business. Hey, Simeon, thanks for joining the call. It's good to speak with you this morning. On the Q, I would say our AUR is in line with the rest of the market. Kind of, you know, high single digits, generally speaking across food and feed. Our market share is on a dollar basis, we're running 2x the market, and on a pound basis, we're running 3x the market in growth. It's the majority of our growth there, well over half, is transactions based, units based, and share gain. Dog dry food is the numbers I was just mentioning right there. Those are specific to dog dry food. We're seeing similar type of numbers in poultry feed, in equine feed, in livestock, et cetera. I would say it is pulling through to the rest of our business, you know, in terms of driving positive footsteps and transactions into our store. Then also, you know, our average ticket continues to remain very solid with very modest reduction in our UPT. In fact, this was the lowest year-over-year in our UPT decline in 2022. When you look at the underlying customer cohorts in our Neighbor's Club program, what you're seeing, and as was mentioned in the prepared remarks, is that the millennials have moved out to kind of rural America and, you know, kind of that Sun Belt migration. you know, they start in poultry and pet food with us, and then very quickly are migrating into 4- 5 other categories in terms of us being their destination. I'd say, you know, we're seeing strong growth. It's market share gains in C.U.E. that we're taking. We're confident we will be able to continue to take those gains. We have the lowest cost to serve the market, the fastest supply chain, the lowest prices, the best customer service. When they get in there, they shop the whole lifestyle, and we're seeing that in our average ticket and also in our underlying customer data. Thank you. Our next question comes from the line of Zach Fadem with Wells Fargo. Zach, your line is now open. Hey, thanks. Good morning. Couple questions on the outlook. First of all, could you walk us through the quarterly comp impact from the calendar shift and if there's anything we need to keep in mind on a flow-through or margin basis for those sales? Second, on your gross margin outlook, to what extent are you incorporating reinvestment to drive traffic growth versus flowing those lower freight and input costs to the bottom line? Zach, hey, this is Kurt. The first question in regards to cadence throughout the quarter. As I mentioned in my prepared remarks, the all four quarters, really, we expect to be in line with our overall guidance. We don't expect significant variation between the quarters. I would encourage you as you reflect back on last year, as we talked about some of the headwinds we saw in the middle parts of the year with the late start to the spring, the drought that impacted Q2 and Q3. We talked about how in those quarters there were some headwinds that took some of the top side off of the comps in those quarters. We see good opportunity to be able to capitalize comping up against those quarters. We obviously had a really strong Q4. We talked about the Winter Storm. Those are all things that factor into, you know, our model as we plan the comps. On the gross margin question, maybe remind me again your question on the gross margin. Yeah. Are you incorporating any reinvestment to drive traffic growth versus just flowing the lower freight to the bottom line? Gotcha. Yep. Well, of course, we always prioritize market share gains, competitive in pricing. We are the lowest cost to serve. We've invested in our supply chain and distribution to be able to capitalize on this shift in the environment where transportations are coming down. We'll be able to take advantage of our own efficiencies that we can control. As there's opportunities, as prices decline, we will take some opportunity, modest as we see it in our plan, opportunity to invest in the gross margin. All of that is considered in our expectation that we could see gross margin growing 20- 40 basis points in 2023. Kurt, just to clarify, the calendar shift won't be as pronounced as 2016 is what it sounds like. Oh, exactly, yeah. Thank you. There is not a, you know, a pronouncement, anything of material. I just point back to how consistent each of the quarters were in 2023. There's really no meaningful shift in there. Got it. Thanks for the time. Our next question comes from the line of Chris Horvers with JPMorgan. Chris, your line is now open. Thanks. Good morning, everybody. I wanted to follow up on the sort of discretionary question that was posed earlier by Karen. As you think about, you know, what you saw in the fourth quarter, you're hearing a lot of retailers talk about a very late Christmas season. I recognize it's a small portion of your mix, but in some of those seasonal categories, let's say, fashion apparel and, you know, footwear and toys, did you see any sort of, like, deterioration? Similarly, you know, if you look at, you know, the data around pet inflation, that's been very strong, but it does seem like there's some unit degradation and some sort of sacrificing treats and the accessory business. Can you talk about those two buckets in terms of how that behavior has changed, I guess, in the back half of the year in the fourth quarter? Hey, Chris. Good morning, and thanks for your question and for joining the call. First, we were very pleased with our Q4 business in general. As I said, Kurt, absent the storm, we were still at the high end of our comp expectations, and we would have still had positive comps transactions for the quarter regardless of the storm. We were also very pleased with our seasonal businesses. They performed in line with our expectations. Then in the last week of right before Christmas, you know, for us, when we have a winter storm like that, it drives more footsteps into our stores, and they end up, you know, shopping the entire lifestyle when they're in there. We saw excellent performance that week in holiday-related items, you know, whether it's in apparel, whether it was in decor, candy, toys, tools. It was a solid, very solid close to the year for us, on both, as I said, not only just on demand-driven, storm-related items. On pets, we are seeing unit growth and double-digit comps across all categories in pets, whether it's dog, whether it's cat, whether it's hard goods, whether it's consumables, whether it's food, whether it's sundries or accessories. Certainly, the food is outpacing the other categories, but all categories in our pet business are seeing very strong growth. Very impressive. Thanks very much. Lauren, we've hit the top of the hour, but we'll let the call go just a few minutes longer because our prepared remarks were longer. Certainly. Our next question comes from the line of Steven Forbes with Guggenheim Partners. Steven, your line is now open. Good morning, Hal, Kurt, Mary Winn. I wanted to focus on member cohort trends. Hal, you mentioned, I think during the prepared remarks, retention rates, right, among the high-value customers. I was curious if you could expand on retention repeat behavior sort of, you know, in aggregate across the member cohorts, as a whole, and whether you're seeing a difference in behaviors, right, between those members acquired over the past three years, you know, versus those members acquired, 2019 or earlier. Hey, Steven, and good morning. This is a great news story for Tractor Supply. You know, what I've seen historically in my career in retail is it takes time when you have a new customer for them to ramp up through your high-spending cohorts. Till they become kind of a mature customer. What we've seen is the customers as you mentioned, I said in my prepared remarks that we've had tens of millions of new customers shop us in the last three years. The majority of those have continued to be active shoppers with us, and a huge portion have become Neighbor's Club members. That cohort is basically shopping us, and we're seeing purchase frequency, average ticket, number of categories shopped, total spend in a year, very much in line with our kinda longtime core customers. They've ramped up very fast. You know, that's why when we say things like our Neighbors Club is outperforming our overall comp, our total company comp, even at 75% penetration and even with the growth we've had, you know, that's why I think it's so exceptional because historically, in my past, as you see your membership program become such a large portion of your sales, it is a tendency to revert to the mean, right? Revert to your overall comp. I think the data set you can see both that we're providing and also in our underlying data just shows you how fast those customers have ramped up and become core customers for us. You know, it's what gives us confidence as we head into 2023. Thank you. Best of luck. Our next question comes from the line of Peter Keith with Piper Sandler. Peter, your line is open. Hi. Thanks. Good morning, everyone. One thing that we're hearing in the channel right now, it's kind of a funny dynamic for farm and ranch, but the chicken category is on fire, certainly there's been some well-publicized discussion of price increases with eggs. I guess I'm wondering, is that a kind of an emerging trend that chickens have perhaps re-accelerated for you? Is that a category that actually could be big enough to move the needle as we look to 2023? Hey, Peter. This is Seth. Hey, thanks for the question. When we look ahead to this next year, we are incredibly excited about our poultry business. Just to go back to some of Hal's comments earlier, I would just say even in Q4 for us, poultry was a primary driver. We have, unlike some maybe commentary you've heard elsewhere, we have not seen the entire year, over the course of the last three years, any slowdown in our poultry business. When we look ahead to this year, we think it could be another record year for us. Our stores are setting Chick Days here over the coming months. When we look out to our center court activity, we look at poultry being a predominant driver for us. When you couple those things with our pet business, you couple those with our live goods business, all the sustainability things that customers are looking for right now as they're looking, you know, to find value, to grow those things on their own, we're looking at poultry to be just absolutely another banner year. Our team is incredibly excited for that. Would definitely agree with the commentary you're hearing out there, and we think we're in a position to continue to take market share in this category. All right, thanks. Congrats on the continued success. Thank you. Our final question comes from the line of Peter Benedict with Baird. Peter, your line is now open. Oh, hey, guys. Thanks for sneaking me in. I just wanted to ask a question around CapEx. Came in above the forecast this past year. Curious if that's just projects costing more, or did you get through more of the projects than you thought? As you step back, CapEx is running around 5% of sales, the last couple years. I think your outlook for 2023 would suggest a similar ratio. How do we think about the path of CapEx beyond 2023? Historically, you guys used to run around 3% of sales. You've been investing aggressively for good reason. Just curious how you would have us think about maybe the CapEx path as we move beyond 2023. Thank you. Hey, Peter, this is Kurt. In regards to CapEx and your two questions, the growth in CapEx in 2022, at the high end of our expectations reflected a couple things. Certainly, there's inflation in the cost of building a distribution center, the new stores, et cetera. That was a piece of it. Also, in this environment, the team's done an excellent job of ramping up and ensuring that all of the pieces that go into these Project Fusion remodels, that we've got the fixtures and all of the equipment ready to go. The pipeline is in good shape for what we plan to use to grow into the 200-250 remodeled stores next year. There's some timing of that capital that impacted 2022. Certainly for 2023, we expect consistent numbers. We've got, you know, a construction of a complete, new distribution center in Maumelle, Arkansas. For both years, they absorbed the $150 million-ish cost of some of our largest distribution centers in those years. That leads to the second question that you had. Going forward, we really believe in that as we said these would be the two peak years, that the biggest investment over the other years is really on the supply chain side, and it's reverting back more to that over the next few years, $600 million-$650 million in capital going forward. It's a very planned, purposeful five-year growth to convert the supply chain and the stores you know, into the new Life Out Here strategy of look and shopping experience for our customers. I would expect to see that number come down a bit after 2023. That's great. Very helpful. Thank you. Sure thing. For that, we'll wrap up our call. Thanks, everyone, for joining us, and we'll look forward to speaking to you on our first quarter earnings call in April. I'm around. If anybody wants to reach out, please let me know, and we'll get you on the calendar. Thank y'all. Have a great day. This concludes today's TSCO fourth quarter 2022 earnings call. Thank you for your presentation. You may now disconnect your lines