Good morning, buddy. Thank you for joining us. I'm Bobby Griffin. I cover consumer hard lines retail here at Raymond James. This morning, we are pleased to have Tractor Supply with us at our conference. We're going to host a fireside chat between Kurt, CFO, and Hal, CEO, and myself. Also with us in attendance from the company are Mary Winn Pilkington and Matthew Rubin, the Senior Vice President of Petsense. And I want to give a shout out to Katelyn Foster as well, who's part of the IR team that does it a lot, and Joseph Underwood, manager of IR as well. So we got the whole Tractor Supply team here. First, guys, thank you for the support. We always appreciate you coming. And yeah, thanks for coming again. Glad to be here. So maybe, Hal, let's kick things off and let's first start at a high level. One of the questions we get a lot from investors is, you know, unpacking the modest slowdown the business saw in 2023, is it more of a sign that things have changed a little bit, or is it more just a function of tough comparisons as well as maybe a little bit of the macro side of things? So maybe can you talk a little bit about what you see in your business today that kind of gives you the cadence and the view that Tractor Supply's, the underlying fundamentals are still there that we're used to? Yeah. Thanks, Bobby. Good morning, everyone. It's a pleasure to see everybody. First off, I'll talk about 2019. We did $8.4 billion in sales. Last year, we did $14.6 billion of sales. We've had a nice run over the last four years. The growth has been very balanced. If you look over that full timeline, it's about 50% transaction growth, 50% average ticket growth. It's a very healthy, balanced growth. It's been equally balanced across a variety of categories and across regions. It's been nice growth, very balanced, very nutritive, and equally balanced between transactions and ticket. If you look at last year, even if you look at 2022 on top of 2020 and 2021, which were very strong growth years, we averaged a 6% comp in 2022 on top of two outstanding double-digit comp years. And then last year slowed down to a flat comp. The primary drivers of last year and the slowness were really two factors, well, three. The first would be some modest disinflation as we got towards the back half of the year. The second would be kind of the underlying shift of consumer purchases from goods to services, which was a big shift in consumer spend last year. And the third thing, while we don't like to talk about it a lot from a last year perspective, was weather. It was one of the worst kind of from a favorable weather perspective, one of the worst setups kind of every month and every quarter of last year. All that led to a flat comp environment. And with our new stores, modest single-digit growth. We are calling for roughly flat comps again this year. With the shift of goods to services still being a primary headwind with some modest disinflation in the first half of the year predominantly. We're very excited about the continued opportunity in our business and continue to gain share significantly. We've got a lot of growth engines at play and investments we're making. We're very committed still to our long-term algorithm and look forward to seeing the conditions return to neutral for us to return to that long-term algorithm. Very good. That's a great backdrop to maybe build off of. So when you look at 2024 today, what are maybe some of the tailwinds and headwinds that are kind of still out there? And really, your customer is a little unique in kind of their lifestyle. So maybe let's, as a second part, talk about your view of the health of the consumer that shops with you and kind of what they're seeing in their daily lives. Yeah. Our consumer remains very healthy. We had positive customer growth last year. It's one of the things we always reinforce to just demonstrate the healthiness and engagement of our customers. We had outstanding retention year-over-year from a customer perspective. We had new customer growth in the back half of last year after coming on top of three and a half years of exceptional new customer growth. So our customer base is very engaged, very healthy, shopping us frequently with high retention and growing. If you look at this year, as I mentioned earlier, kind of two big things that we expect to impact our business this year that create a less than neutral setup for us. The first is continued consumer shift from goods to services. Pre-pandemic, services were 69% of personal consumption expenditures, and goods were roughly 31%. That moderated all the way down to below 65% from 69% during COVID, has made its way back to kind of 67, 67.5%. So starting to normalize, but we anticipate there would still be some normalization in 2024, which will create some headwinds across all of the goods categories in retail. If you look at retail more broadly, I think just about the, my guess is, the average consensus of comps as we start out the year probably is flat. And we're roughly in line with that as well. And if you looked at the PCE data that came out, I think it was on Monday, it had similarly, you had growth of 6% in services, maybe it was like 6.5%, and you had growth of goods at 1%. So that's certainly what we expected is what we saw in the first month of the year. The second headwind, as we talked about, do expect some modest disinflation. We had 11% inflation in our business in Q4 of 2022. We had high single-digit inflation in Q1 of 2023, so this quarter of last year. It does start to drop sequentially through the year in terms of a headwind for us. But early in the year, last year's inflation will be a headwind for us as well. We're not counting on any offsets for weather this year. I think we played too much a weather forecaster last year and going to get out of that business. And also we don't have any anticipation of interest rate reductions and any impacts on secondary markets for us like housing and those sorts of things. But net net, our customer is very healthy. They shop us very frequently. We have very high retention rates. Our customer counts are growing. And we've got great programs like the Neighbors Club in place to drive that loyalty and that retention. Very good. And I think that's maybe a great segue into you, Kurt. Maybe let's talk a little bit more about deflation. I guess first, let's think about it on a category perspective and kind of what you're seeing across your business. You kind of operate in a good portion of the business as C.U.E., consumable, usable, edible products, as well as then some discretionary items. So maybe let's first touch categories and then we can dive in from there. Yeah. Well, I'll start just coming from what Hal mentioned. I think he teed it up pretty well as a backdrop with the backdrop of the last couple of years having some inflation in there. This year, we really look at it as a year of stabilization in regards to inflation, disinflation. We saw significant inflation across all categories of costs throughout 2021 and 2022. 2021 and 2022, it started with commodities and then it went into whether it's transportation or the biggest piece of it, just overall business operational costs. And then in late 2022 and throughout 2023, you saw a bit of reversion of some of that in the disinflation. And even though 2023 was a net year on an AUR inflationary, there was a lot of deflation or disinflation occurring throughout a lot of the commodities. And we're seeing a lot of it more of a stabilization. We saw stabilizing costs in the back half of this year. For the most part, we would expect that, as Hal mentioned, we'll cycle some of those higher inflationary quarters, particularly the first half of this year. But for the year, we really see the costs and our retail prices relatively stable. I know you asked about categories. Specifically where we saw inflation, you saw inflation in a lot of the feed and food throughout 2021 and 2022. That has the highest percentage of commodities like grains, etc. But also has a lot of transportation and production costs. In the last six quarters, we've seen disinflation in the grain categories. Most of that has really stabilized and has been in the prices in the back half of 2023. For the last two years, pet food saw inflation principally from operational costs and capacity. Pet food does not have near as much of an ingredient from the grains as much as it does the production costs, transportation costs, etc. And from our current state, pets really stable at this point. And I think it's an industry that saw significant inflation, but yet more stabilized costs today. So we're lapping some of that inflation, but we don't see a significant pressure from further disinflation as so much of the AUR increases, cost increases that we saw in our business, I think pretty much throughout retail is structural. So much of the labor and the operational costs that have really not reverted. And there's not a strong, reasonable, plausible scenario that you start to see some of those costs revert back. Very good. So maybe let's switch gears a little, talk a little about two topics that are kind of popping up a little bit: tariffs and the transportation market. And tariffs with a potential administration change coming later this year. And then transportation, we see some Red Sea issues. And transportation, excuse me, has been an area of a nice tailwind for you guys. So just maybe a little bit on that side of the business and what you're seeing. Yeah. Certainly, it's gotten a lot of discussion and the tariff topic has come up. We understand that. The way we look at it, and I'd encourage you to look at it, is that there's a lot of potential that could come up in the fall. We understand that. So it's smart to think about the different scenarios that are out there. I think it's also cautionary to begin to get too predictive on different scenarios that could occur because there's so much uncertainty in it. For us and our business, though, it's wise we look at those and we begin to plan for different scenarios. Those are scenarios that we think through. As far as tariffs, the way to look at it is referring back to 2018 and 2019 when tariffs were put into place under the Trump administration. Tractor Supply, as a retailer, is one of the lower direct import retailers. There is such a significant portion of our mix of goods is commodity-based, U.S.-based. We direct import roughly 12% of our sales. So we have a smaller exposure. In those years, our gross margin remained steady. We did incur some impact from tariffs, but it was modest compared to most of retail. As a needs-based business, we did have to pass on some of the tariff costs onto retail pricing. We didn't see much of an impact from elasticity, consumer demand, and our margins held pretty strong. Under that scenario, we would anticipate we'd be able to manage very similarly if there were any other changes in the near term. Very good. And the only thing is, I'll add two things I'd add is one, because a lot of our products that are imported are agriculturally oriented, we actually were able to get a decent bit of exclusions on those that other categories are not. And then as it relates to the Red Sea, I mean, certainly have seen, we've all watched with the news and we're all seeing the ships backed up around there. And also you're seeing some of the constraints in the Panama Canal, which is also impacting things. But again, with our 12% imports, it's a much smaller piece of our business. And the stuff that really matters for us at this point is all in the United States because we're locked and loaded for spring. Very good. Well, I think that's a great summary of kind of the current environment. Maybe let's switch gears a little, talk about some of the growth initiatives here at Tractor. As you look here today, the business has performed very well over the last, call it, 5, 10, 15 years, long history of it. What do you see that excites you to kind of keep that performance going over the next 5 and 10 years? Yeah. Tractor Supply just celebrated its 85th anniversary last year. This is a business that's had only one year of negative comps in the last 30+ years. It's a very consistent, stable, resilient business. Though it's had just tremendous growth, as we highlighted earlier. But the thing that's also equally exciting from all that historic performance is that we have significant opportunity still ahead of us. Currently, we're in the midst of executing year 4 of our Life Out Here strategy. It's a 5-6-year strategy that we had put in place in October of 2020. Core components of that strategy are our Fusion remodel program, the addition of garden centers, our Neighbors Club program, our digital kind of One Tractor strategy. And then we've pulsed in a few different programs from time to time, including our FAST program, our supply chain expansion. And those are all initiatives that have been well underway for the last 3 or 4 years. The exciting thing as we look towards the back half of the decade is that as those initiatives begin to scale and then reach kind of critical mass, we've got a whole nother slate of initiatives lined up ready to go. And those range in everything from delivery and pet services and retail media to many others. So the list that we have is quite a long list of opportunities. I always talk about the thing that one of the things that keeps me up at night is just prioritization. This is a business that's so fortunate to have so many growth opportunities that one of our most important tasks is prioritizing which of those priorities we go after first and then allocating our resources against those. So we've got a very clear set of initiatives that we're working on right now that are very nutritive in their growth and their value that they create for shareholders. But a very large list following that that we'll be shifting to in the back half of the decade. Yeah. I think we got about 15 minutes. So we won't be able to unpack everyone. And maybe let's touch on let's start with Project Fusion, Side Lot since those are probably the two most well-known. And then we saw a store last night. So maybe we'll talk a little bit about delivery then after that. Yeah. Perfect. So our average store is over 10 years old. We have 2,200+ stores in the United States. And in late 2020, we rolled out a store remodel program that we call Project Fusion. And 3 main objectives with Project Fusion. The first is space productivity. So it had been a while since we had relooked at kind of the allocation in a macro way of space we're allocating to certain categories. Project Fusion, because we're touching the entirety of the store at once, gives us an opportunity to move categories, expand some, shrink some. And just that work drives a mid-single-digit comp lift when we're done with the reset. So in addition to that, though, the two other things I would say is, one, it brings the store up to a more contemporary standard. Light boxes, a central hub desk up front, updated technology within the store, upgrading of bathrooms, and that sort of thing. What we've seen with our data is we have stronger traction of new customers in addition that are driving the comp lift. So it's driving comp lift from a productivity perspective, but it's also attracting more new customers because it's a more contemporary look and feel. The third thing I would call out is it really, as I mentioned earlier, our average store is over 10 years old. The store we walked yesterday was a 22-year-old store, looked almost brand new. We completed that reset, that remodel, in September of last year. So it wasn't like we knew that we were going to be walking it yesterday. And the store basically looks brand new. So as you think about investing in retail, one of the big things is you can't let your stores age, right? And you've seen many retailers who have gone out of business over time. And I would assert that one of the big reasons why is the lack of investment in their stores. And so this is really, in many ways, while it's not part of our calculation from a math financial perspective, pushes out the terminal value of our store by 10, 15, 20 years in terms of value that creates. So it's a big remodel program. We've completed just at 40% of our store base over the last three years. All new stores start with a Fusion remodel. And then we do around 150-200 remodels a year in addition to that of existing stores. I think we've got a runway of another 4 or 5 years left. Then we'll have completed the full chain. In some select circumstances, about two-thirds of the time, we will add a garden center when we do the remodel. The store visit we did yesterday evening had a garden center as well. This takes our side lot. Typically, all of our stores have a concrete pad that's about 15,000 sq ft outside of our store. Historically, that concrete pad had a place we stored agricultural products, fencing, those sorts of things. What we've done is improve the merchandising of those, put them on racking, got them up off the concrete. Then that allowed us to reclaim around 5,000 sq ft of space out there. We've converted that to a garden center. So it's incremental selling square footage, if you will, a new category for us to get in. And when we do that in combination with our Fusion remodel, we see a high single-digit lift in the store comp. Secondarily, we also see a year two and a year three maturity curve as it takes a couple of years for customers to find and become kind of ingrained in their behavior for them to shop us for their live goods. So those are the two remodel programs we have. One is kind of all-stores Fusion and then Garden Center in about two-thirds of the stores. Very good. And I think another aspect of the growth here is new stores. So maybe let's quickly touch on the real estate kind of model that you've been building out is getting more and more granular into where you guys can put stores at. And then maybe Kurt mentioned some of the returns you're seeing and how they compare versus new stores that were opened 5, 6, 7 years ago. Yeah. The new stores continue to perform very well. We've seen growth in the mature stores over the last three years growing from roughly $4.5 million-$6.5 million. But we've also seen our new stores growing equally at that same level. Pre-COVID, they were opening up roughly $3 million-$3.5 million. And a new store year one is running $4.5 million for us. So we continue to see strong new store productivity out of the new stores. We announced not only moving from 2,800- 3,000 markets domestically for Tractor Supply, but we also said we'll move to 80 new stores in 2024 and then 90 new stores in 2025 because we not only have built the muscle and the strength within the real estate department, but we have confidence in our real estate strategy, our ability to pick the markets and the location, and the returns that they give. So we're continuing to have even stronger growth coming out of our new stores. You asked about the returns on our new stores. The new store productivity is as strong as ever. They're generally cash positive after year 1 and pay back in roughly 2 years. So it's one of the best investments that we have that we allocate our resources to because it not only gives us a strong return, but there's a 4- to 5-year maturation process, as you see in retail, as these new stores grow into a mature level. So it's a comp driver every year as well. Very good. And how AI has been a big topic here in the market of late. So maybe let's touch a little bit on how you see AI potentially impacting your business over the next one, two, or even five years. Yeah. Absolutely. One of the things that I'm pleased with is the amount of technology that we've integrated into our business over the last four or five years. Examples for you, every one of our team members wears an Android device and a headset. We implemented that in late 2020. We use that for point-to-point communications inside of our stores. We do about 150,000 point-to-point communications a day. That's one team member talking to another. We also use it for tasking. So when we need to do a pick-in-store order for buy online pickup in store, it'll come down through the headset and allow a team member to confirm. If we need to fill up a customer with propane out by the propane tank, a customer in the app can click on a button and say, "I need help with the propane tank." And that'll send a signal through the headset for a customer to come out. So we've got handheld devices that all of our team members use and has high functionality from an apps perspective. It's built on an open-source Android OS. But one of the things we've been really implementing recently in the last 6-9 months, I think we've been very much out on the forefront in retail, is the use of AI. A couple of instances I'll mention, but there's 6 or 7 really good use cases that we've rolled out across marketing and supply chain, etc. But the two I'll mention relate to customer service in the stores because I think that's uniquely differentiated from what others are using it for. Most are using AI to take out cost, to be more efficient, really to drive things like self-checkout and others. We're really investing more into customer service because that's a differentiator of who Tractor Supply is. We were just recently announced as kind of from ACSI as the leading customer service retailer out there in the United States. And all our AI investments in the stores, for the most part, are oriented around that. The two I'll mention, one is as it relates to our cameras in our stores. So we have cameras, security cameras throughout our store. Historically, those have been kind of just dumb cameras. This year, we'll update 800 of our 2,200+ stores' technology, the hardware and software stack that allows those cameras to become smart cameras and basically enable computer vision. And then using that computer vision, we can drive tasking in our stores to drive improved customer service. So an example of that is the camera out front on our front apron that looks out where we have all of our riding lawnmowers and our grills assembled. If a customer's out there shopping one of those, we would historically never know that a customer's out there. And they would have to come in and ask for help, and we'd have to walk out there. Or we'd have to just randomly kind of run into them out there. This now monitors the front apron, looks to see if a customer's opening maybe the hood of a riding lawnmower, checking out the manual, maybe back and forth between two or three of them. It'll observe that behavior. It's been trained to know that customer's shopping, not just walking into the store. Then it'll send a signal to our team member and says, "Customer needs help out on the apron." We also do that in garden centers. So if it's a non-peak selling time for the garden centers and maybe there's not a person out in the garden center, it'll send a note and say, "A customer's shopping in the garden center. Please come out." We also have use cases where the one overlooking the registers allows us to know when we need to open a register using AI and how many carts are lined up, people are lined up, etc. We also, in our Theatro earpiece, the second case I'll mention is we've rolled out a knowledge tool inside of the headset that I mentioned earlier that all the team members are wearing. So now our team members can ask things like, "When should I switch my chicken from crumble to pellet feed?" And it'll come back and say, "Between 13 and 17 weeks." Or if it says, "My dog has skin irritation. I want to switch foods. What food is best?" It'll come back and say, "We sell three healthy skin dog foods. Here's who they are," and give them a recommendation. It also can ask, "Where's something located in the store?" And it'll tell them the aisle location for our team members or pricing. And even now, we're rolling out HR-type information like, "Where can I get my pay stub?" And it'll even say, "Here's where you can find it. Would you like me to text that to you?" So it does all these sorts of things for our team members now to enable customer service and to enable knowledge. So very much, I think, out on the forefront using AI, whether it's for computer vision-type stuff or whether it's in knowledge tool-type applications in our stores with our 50,000+ team members. I think another very strong aspect of Tractor Supply is the company's loyalty program, Neighbors Club. I think, actually, you guys just put out some enhancements this morning to the program. So really kind of a two-part question. One, kind of where do you see that program going over the next couple of years? And then two, with 32 million members in that shopping very frequently, there's probably an opportunity for some type of ad business as well that could benefit the bottom line as well. Yeah. So our Neighbors Club program, as Bobby mentioned, is 32+ million members. They represent a high 70% of our sales. Their retention rates on a year-over-year basis are approximately 80%. So very strong retention rates year-over-year. It's a tiered rewards-based system. Our top tier, almost never attrit, like 98% retention of our top-tier Neighbors Club members. So great retention overall. Our most loyal customers and heavy shoppers, almost 100% retention. And we rolled this out. We've always had a Neighbors Club program, but it was a little bit more just of a loyalty program. We made it a tiered-based rewards program in March 2021. And then, as Bobby mentioned today, we just rolled out some new updates to it. We changed some of the grading in the tiers. We adjusted the rewards program to allow for lower redemption dollars, so like a $2 rewards program and a $5 rewards program. And then we also announced that at the midpoint of this year, we'll be rolling out a heroes designation. So if you're in the military, police, or fire, EMS, you can show your identification and then be designated as a hero inside of our loyalties program. And that'll earn you additional benefits. So it's a very robust loyalty program. Drives a lot of behavior. We're able to use all that data to drive the behavior through email, through digital marketing, through text outreach, through mobile notifications, but also personalization of your experience on the website and inside of our mobile app, not only in your homepage type, say, but also in the way your search results come about. Then to Bobby's point, and I mentioned earlier, retail media, it's not a big area for us right now. We certainly have a program, and it accords us some dollars and profit. But as we look towards the back half of the decade, again, that's another big opportunity for us to harness the power of 30 million+ members that are highly engaged with us, where we have lots of data on them, to be able to then use that to allow our vendors and other advertisers to better reach that customer base. Very good. We've got about two minutes left, Kurt. I can't let you out of here before capital allocation, maybe another margin question. So when you think about the business has gone through a really good phase of growth, you still got growth in front of it. So what's some of the moving parts inside the margins over a multi-year basis you see? And then we'll wind that into what does that mean from a capital allocation standpoint. Yeah. So in the last 4 years, gross margin has had a strong growth, 150 basis points of growth in our gross margin. As we gave guidance this year, we're anticipating gross margin expansion of 40-60 basis points. So by the end of 2024, our guidance would say we'd be nearly 200 basis points in gross margin. Two-thirds of that growth, though, what's important is coming from structural parts of the business, particularly areas like by getting the new distribution centers and mixing centers into our business, reducing Stem Miles, driving efficiency into the supply chain. By adding the Field Activity Support Team, which is funded through vendor support, we're driving two-thirds of the gross margin expansion. A third of that, and it'll continue this year, is really coming from great cost management, leveraging of scale, EDLP, and driving product margin improvement in spite of still higher transportation costs and an unfavorable mix of C.U.E. We've had such a growth in C.U.E. It sometimes gets missed. The gross margin expansion has been above that in spite of it. So we anticipate that we continue to grow gross margin. And most of that is very structural. And in regards to capital allocation, we're going to continue our capital allocation, which is very fundamentally built on the fact that this is a strong cash flow business. We had $1.3 billion in cash from operations last year and invested over $700 million in our business. We're producing roughly $600 million of free cash flow. We anticipate growing and anticipate nearly $1.5 billion in cash from operations in 2024 and $700 million in capital. So it's really putting us near like $900 million in free cash flow. And that allows us to continue to invest. We had the last three years over $1 billion in return to shareholders between a growing dividend and share repurchases. So we're going to continue to be able to do exactly what we've said with the Life Out Here strategy. We're going to continue to invest in the business to grab market share and expand that customer experience, that household shared. We can do that while we're also continuing a very solid, consistent share repurchase program and a dividend payout that's been consistent at or above our net income growth and a 40% payout. Very good. I think we're right on time. So Hal and Kurt, thank you both for your time. Thanks, Bobby. Yeah. Yeah. Yeah. Appreciate it. Thanks, everybody.