Tractor Supply Company (TSCO) Q4 2015 Earnings Report, Transcript and Summary

Christine E. Skold - Vice President-Investor Relations & Strategy Gregory A. Sandfort - President, Chief Executive Officer & Director Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer

Michael Louis Lasser - UBS Securities LLC Christopher Michael Horvers - JPMorgan Securities LLC Peter S. Benedict - Robert W. Baird & Co., Inc. (Broker) Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker) Jessica Schoen Mace - Nomura Securities International, Inc. Stephen Vartan Tanal - Goldman Sachs & Co. Joshua M. Siber - Morgan Stanley & Co. LLC Scot Ciccarelli - RBC Capital Markets LLC Adam H. Sindler - Deutsche Bank Securities, Inc. Jaime Katz - Morningstar Research Charles Cerankosky - Northcoast Research Partners LLC Eric Bosshard - Cleveland Research Co. LLC Joseph Isaac Feldman - Telsey Advisory Group LLC David G. Magee - SunTrust Robinson Humphrey, Inc. Seth M. Basham - Wedbush Securities, Inc.

Good afternoon, ladies and gentlemen, and welcome to Tractor Supply Company's Conference Call to Discuss Fourth Quarter and Full Year 2015 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 with one follow-up. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Tractor Supply Company. And as a reminder, this call is being recorded. I would now like to introduce your host for today's call, Ms. Christine Skold of Tractor Supply Company. Please go ahead. Christine E. Skold - Vice President-Investor Relations & Strategy: Thank you, operator. Good afternoon and thank you for joining us for Tractor Supply Company's quarterly earnings conference call. Before we begin, let me reference the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. This call may contain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of the company. Although the company believes the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included 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. Lastly, Tractor Supply Company undertakes no obligation to update any information discussed in this call. I'm now pleased to introduce Greg Sandfort, Tractor Supply Company's President and Chief Executive Officer. Greg, please go ahead. Gregory A. Sandfort - President, Chief Executive Officer & Director: Thank you, Christine. Good afternoon everyone, and thank you for joining us. On the call with me today are Tony Crudele, our EVP and Chief Financial Officer; and Steve Barbarick, our EVP of Merchandising, Marketing and Supply Chain. As we previously reported, the fourth quarter fell below our expectations, due principally to the record warm temperatures across most of the country. Our team managed the business to the best of their capabilities throughout the quarter. And over the past several weeks, we have experienced improvement in our sales trends for cold weather products, as the weather and temperatures have normalized. As the most dependable supplier of everyday basic products for the rural lifestyle, our customers shop our stores regularly for their basic needs. Those basic needs include: food and food for their pets, livestock and other animals; repair parts for their fence lines and animal containment; and maintenance products to ensure their equipment is properly serviced. This past quarter, with the unseasonably warm temperatures across many regions of the country, the need for cold weather products, such as insulated outerwear, snow blowers and heating products just did not materialize as we had planned. Despite the warmer temperatures negatively affecting the sales of cold weather products, our sales of everyday basic products in non-seasonal categories continued to perform well in the quarter, increasing in the low- to mid-single digits on a comparable store basis. Sales in the Western region, where weather was more normalized, did experience high-single-digit comparable store sales, and we delivered our 31st consecutive quarter of transaction count growth as a company. We believe this performance reinforces the resiliency of our model and our ability to meet the needs of our customers. We also feel that we are well-positioned with the current mix and depth of products to address our customers' ongoing seasonal and basic needs as we soon begin the transition for the spring selling season. Now let me touch on a few operating highlights and key initiatives in the quarter and for the upcoming year. Our new customer loyalty program, Neighbor's Club, was rolled out to 140 stores in October. And the fourth quarter was our first full quarter with the program in place. While it is early and the program is still being tested, we are pleased with the enrollment, which is running ahead of our initial projections, and our customer attribution rates continue to improve. Our customers appreciate the ability to stay connected with us, and we are excited about the opportunity to use the data we are collecting to speak to them in more direct and relevant ways. We will continue to monitor the results from the initial test and determine next steps with the program later this year. In omnichannel, we made several enhancements to the platform in the fourth quarter. We increased the number of products and vendors available for dropship. We expanded our delivery capabilities for larger heavier items, and we implemented new tools at the store level to improve the customer experience. And since introducing the fully-responsive website, we have noted a steady increase in the amount of mobile traffic as well. Customers are choosing mobile to find their nearest store, check availability of product and view informational videos. We now have over 150 dropship vendors fully implemented, and more customers are choosing the buy online and ship-to-store option. Later this year, we will be testing the buy online and pick up at store option. We are currently testing mobile devices as well in a select number of stores to assist our team members with faster availability of product information and improved checkout speed for our customers. Thus far, the feedback from both our team members and the customer has been positive. At less than 1% of our sales, omnichannel is still a very small part of the business, but it is growing rapidly, and we are delighted with the progress we have made with our offerings of content, community and commerce. With respect to merchandising and store operations, we will continue to test new products, raise the level of execution and improve our customer service in our stores. We continue to score best-in-class on our customer satisfaction surveys and look to further enhance their shopping experience. Our focus in 2016 will continue to be on new and differentiated products across the store, as well as opportunities to increase our exclusive brand penetration, always being mindful of the needed positioning for key national brands that our customers expect to find within our assortments. We are improving our in-store special order process in 2016 to enable our team members to better assist customers in locating the hard-to-find products through expanding our product offerings with our dropship vendors. And also in 2016, we expect to begin implementation of a new product information management software tool. This will help us standardize product information across all selling channels and will improve the quality of images, product descriptions and the speed with which we can add additional dropship vendors to our omnichannel commerce capability. We are currently performing a comprehensive reset of our pet food area to better align our product selection with more relevant brand assortments at a localized level. Our recent announcement regarding our partnership with Save Our Shelter on the CW's television channel reinforces our commitment to pets. And through the support of animal shelters, we hope to provide a healthy and happy environment for pets that are awaiting adoption. In our supply chain we began shipping to stores from the new Casa Grande, Arizona, distribution center in the fourth quarter. This new DC will service the growing base of Western stores and will, over time, reduce outbound stem miles while improving our delivery capabilities. The facility has the capacity to service upwards of 250 stores and should be shipping to approximately 120 stores by the middle of this year. As part of our continuous improvement culture, we are also performing a comprehensive network analysis in 2016 to ensure that we have the plans in place to support our future growth. This is something we have completed every three years to four years as a company as we've grown our store base. We will continue to reduce our impact on the environment through our Stewardship Program. And we are proud to have achieved our second LEED Silver Certification with the opening of our distribution center in Casa Grande, Arizona. And in 2016 and 2017, we will be embarking on our largest environmental sustainability project to-date, as we retrofit the entire store base with new LED lighting, which will substantially lower our future store lighting energy costs. In closing, let me extend my thanks to all of the hardworking team members of our Tractor Supply family, who go the country mile every day for our customers. It is our people who are the driving force behind the success of our company. With that said, I'd now like to turn the call over to Tony for a more detailed commentary on our fourth quarter results and an initial look for 2016. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Thanks, Greg, and good afternoon, everyone. For the quarter ended December 26, 2015, on a year-over-year basis net sales increased 3.9% to $1.65 billion. Net income decreased 0.3% to $111.7 million, and EPS increased 1.2% to $0.82 per diluted share. Comp store sales decreased 1.4% in the fourth quarter, compared to an increase of 5.3% in the last year's fourth quarter. Comp transaction count increased for the 31st consecutive quarter, gaining 0.6% on top of a 3% increase last year. Comparable transactions were driven by the continued strength of our C.U.E. and everyday items. Average comp ticket decreased by 190 basis points compared to last year's 230 basis point increase. As a follow-up to the information previously provided in our business update press release, comparable store sales in the fourth quarter were negatively impacted by the warm winter weather. Outside of seasonal, the core basic business performed very well. Specifically, the livestock and pet category experienced a mid-single-digit same-store sales increase. Sales softness was primarily isolated to the cold weather seasonal categories of heating, specifically stoves and fuel, and installed (sic) [insulated] (11:34) outerwear, particularly in the Northeast and Midwest regions. The decline in these categories alone impacted comp sales by nearly 400 basis points. Since the business update press release, sales in cold weather categories have continued to improve. Sales were also impacted by softness in seasonal big ticket items, such as snow blowers, log splitters and generators. Big ticket sales declined approximately 6%. However, we did see strong sales in trailers and other non-seasonal related outdoor power equipment. We estimate that big ticket had a negative impact on average ticket of 70 basis points. Sales in the Northeast and Midwest were the most impacted by the unseasonably warm weather. Excluding these regions, the remaining regions of the country aggregated a low-single-digit same-store sales increase. The company had high-single-digit comp sales and growth in the Western region, where the seasonal trends were more normalized and the store base is less mature. In addition to the points highlighted in the business update, with respect to sales cadence through the quarter, November was the only month in which we experienced a comp sales decline, as we were cycling a double-digit comp sales increase last year. Although still a small percent of sales, e-commerce sales increased 30% in Q4. Deflation continued to moderate, and we estimate it impacted sales negatively by approximately 15 basis points in the quarter Overall, Texas stores performed at chain average. However, the delta in the performance of the Texas oil patch stores widened relative to the chain average. When comparing only to the Southern stores to adjust for the winter sales impact, Texas store sales performed approximately 350 basis points below that store group. Comp transactions for Texas were positive and performed consistent with the Southern stores. The variance in performance is primarily associated with products specific to the oil industry business that carry a higher average ticket and to a lesser extent the related decline in traffic normally generated by these categories. Now turning to gross margin, which was essentially flat at 34.1% on top of last year's increase of 16 basis points. The merchandise team did a great job in managing gross margin during a difficult sales environment. While we were slightly more promotional with clearance than in the prior year, rate did not have a significant impact, as we had a very strong price management in feed and other categories and strong markdown management related to several in-store events. The mix of merchandise had a negative impact of 11 basis points on gross margin. This was driven by the strong sales in C.U.E. product, specifically animal feed and pet food, which are below chain average margin categories. The weakness in winter seasonal sales did not have a material impact on gross margin, as the soft sales in low-margin categories, such as heating, were offset by the soft sales in high-margin categories, such as insulated outerwear. Freight was slightly unfavorable. Lower diesel prices offset the stem mile increase from our Western store expansion, but the higher mix of animal feed and pet food led to modest increase in freight expense. We estimate that deflation had a minimal impact on gross margin, as deflation continued to decline in the feed category. Import purchases in the quarter increased 22.3%, as some of the spring receipts came in early than last year. Imports represented 5.5% (sic) [15.5%] of the sales mix. Also, exclusive brand sales increased 3.9% and were approximately 29.4% of the sales mix. For the quarter, SG&A including depreciation and amortization was 23.6% of sales, an increase of 71 basis points over the prior year's quarter. We estimate that comp sales decline had an overall deleveraging impact on SG&A of approximately 35 basis points. We were very pleased with our payroll management in Q4, as the team reacted well and allocated payroll appropriately with the sales trends. We were essentially flat year-over-year as a percent of sales. We did incur start-up expenses for our Southwest distribution center and the two mixing centers. Operational costs of these facilities, as well as the Hagerstown DC expansion, resulted in de-leveraging of approximately 25 basis points. We also experienced slightly higher rental leverage from the new stores as they ramped to maturity. This was driven primarily by the Western store openings which, as we discussed, generally open with a higher rent-to-sales ratio. The deleverage was offset by incentive compensation. As a result, the Q4 performance was well below the run rate of the previous quarters. We estimate the year-over-year leverage was 37 basis points. Certain occupancy costs, such as utilities and common area maintenance, decreased as a percent of sales as a result of the warmer winter. The tax rate for the quarter was 35.4% compared to 36.7% last year, due to additional state and federal tax credits and a reduction in the FIN 48 reserve. Turning to the balance sheet. At the end of the year, we had a cash balance of $63.8 million and $150 million outstanding debt, compared to a cash balance of $51.1 million and no outstanding debt at the end of last year. Since our revolver is due to mature in October this year, the $150 million outstanding debt is shown as a current liability. In the event that we refinance this obligation before the issuance of our 10-K, a portion of or the entire amount may be classified as long-term. During the fourth quarter on the stock repurchase program, we acquired 565,000 shares for $48.7 million. Inventory per store, including inventory in transit, increased by approximately 7%. In-transit merchandise is included in the calculation to be more comparable, as we had several Q1 receipts in December that were in transit at last year-end. An increase in cold weather seasonal categories accounted for 250 basis points of the increase, while the inventory build at our new Southwest DC was approximately 100 basis points of the increase. The remaining increase is principally from investment in key categories to support the core sales. Capital expenditures for the year were $236.5 million, compared to $160.6 million last year. We opened 26 stores and closed two Del's stores and one TSC store in the fourth quarter, compared to 22 new stores opened and one Del's store closed in the fourth quarter of 2014. For the year, we opened 114 stores and closed five Del's stores and three TSC stores. The CapEx increase this year relates to the construction expenditures of our Southwest DC and the two mixing centers, three incremental self-developed new stores related to the Del's transition, and various IT projects and related hardware. Turning our attention to 2016. As Greg mentioned, we will continue to fund our ongoing operational initiatives such as logistics, merchandise systems and omnichannel to position the company for future growth and, at the same time, manage the business to deliver our targeted mid-teens EPS growth. We expect full-year sales to range from $6.9 billion to $7 billion. We have forecast the comp sales range between 3.5% and 5%. We are targeting 20 basis point to 25 basis point improvement in EBIT margin compared to 2015. We anticipate net income to range from approximately $455 million to $467 million or $3.40 to $3.48 per diluted share. We expect to open between 115 and 120 new stores with approximately 50% scheduled to open in the first half of the year. We will continue to transition Del's stores to Tractor Supply markets, and we expect to close 15 Del's stores as we backfill the Northwest. Additionally, we forecast that our effective tax rate will be approximately 36.9%. We are initially targeting $230 million to $250 million of capital expenditures in 2016. As we stated in our long-term capital plan, we look to manage annual capital expenditures in the $230 million to $280 million range in order to be ratable in our allocation of capital and leverage depreciation expense over the next several years. In 2016, we will not have the significant cash investment of a distribution center. The key initiatives we have identified for 2016 include LED lighting retrofit for half the chain and other store energy saving initiatives, store sales initiatives and resets, and new store capital related to higher number of retrofit stores. We plan to continue to make purchases under our share repurchase program as part of our long-term balanced approach to shareholder return. We expect to be in a borrow position at the end of each quarter and target the year-end debt position to range between $200 million and $250 million. For modeling purposes, we estimate that the diluted shares outstanding, inclusive of option grant and share repurchase activity, will be between 134 million to 134.5 million for the full year. Let me discuss some of the assumptions that helped us form our projection for 2016. Although our customer may have more discretionary income as a result of lower gas prices, we believe the consumer is more cautious, as they are concerned about the direction of the economy and world events. As a retailer that serves our customers' everyday basic needs, we believe that we'll be able to continue to serve a key segment of our customers' lifestyle. As I mentioned on our third quarter call, fiscal year 2016 will be the year that we add a 53rd week to our retail fiscal year. The fourth quarter will also have an additional comparable sales day as a result of this calendar shift. Based on our current modeling, we estimate the EPS benefit in Q4 to be approximately $0.03 to $0.04. Last year, deflation moderated and averaged approximately 35 basis points. This year, we expect deflation to be less of a headwind, ranging between 20 basis points early in the year and flat in the second half of the year. Although we expect the oil patch stores to continue to perform below chain average, it is difficult to estimate the overall impact of sales and earnings, as lower oil prices should have a favorable impact on transportation cost and consumer disposable income which could favorably impact the remaining 90% of the chain. Other than extremely warm weather in Q4, there were no significant weather events that we will be cycling. As we've stated in the past, we generally benefit from an early spring. We are hopeful that the weather pattern as a result of El Niño will bring an early start to spring. Although the first quarter has gotten off to a solid start, let me remind you that March is the most impactful month in the quarter and is very dependent on spring weather. As we've emphasized in the past, we believe our business can be more accurately assessed by focusing on the halves, not the quarters. We would expect improvements in gross margin rate to come from the execution of our key gross margin initiatives, including price management, continued strong markdown and inventory management, strategic sourcing, and exclusive brands. Trade expense should benefit from the lower diesel prices and the reduction of outbound stem miles, as the result of opening the Southwest DC, which should be substantially offset by increased inbound transportation cost. We are targeting a 20 basis point to 25 basis point improvement in gross margin for the full year, net of the expected headwind from increased transportation cost and the mix of merchandise. In terms of cadence for gross margin percent improvement, we forecast a year-over-year improvement each quarter, with Q4 showing the smallest increase. Additionally, we are more comfortable in our ability to improve Q1 margins as the cold weather in late January has provided improved sell-through of winter merchandise. Although the January sales have reduced the carryover of some of the winter season merchandise, it still may be challenging to improve inventory turns. We will not sacrifice in-stock levels for improved turns, and we will continue to invest in key merchandise categories to drive sales and traffic. With respect to SG&A, we continue to target maintaining SG&A growth in line with our sales growth. We may have slight SG&A deleverage this year and estimate that we would need at least a 4% comp sales increase to leverage SG&A in 2016. Two factors to consider are: this will be the first year of operations of the Southwest distribution center. This will increase SG&A on a year-over-year basis, while improving gross margin through reduced transportation expense. We expect a net EPS decrease of approximately $0.04. We will continue to transition the Del's stores to Tractor Supply stores. We expect to close 15 Del's stores which will negatively impact EPS $0.015, allocating a $0.005 to Q1 and a $0.01 to Q4. With respect to SG&A by quarter, we believe that Q1 will be the most difficult quarter to leverage SG&A, as it has a lower sales base, and we'll be operating the new Southwest distribution center and have not yet cycled two mixing centers in our Hagerstown DC operations. We expect SG&A year-over-year growth will be the largest in Q4 as a result of the incremental year-over-year incentive compensation and Del's closings. As in the past, we will provide more color regarding our expectations for the subsequent period at each quarterly conference call. That concludes our prepared remarks. Operator, we will now turn the call over for questions.

Thank you. And we'll take our first question from Michael Lasser with UBS.

Guys, good evening. Thanks a lot for taking my question. So, it sounds like your expectation is any stores that are leveraged to the oil patch are going to bottom out, may not get better soon but may not get worse from here. Is that the correct assessment of what you're seeing? And along those lines, do you have any other clusters of stores that are levered to areas that are dependent on, one, either commodity or industrial segment of the economy that are exhibiting similar trends to those stores in the oil patch? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah, Michael. This is Tony. The information that we're providing, we generally tend not to give too specific geographic information. But we have been getting a lot of questions, obviously, on Texas and the economy down in Texas. What we've noticed is that it's been a slow decline over the past few quarters. We can't necessarily project whether that will continue. We're just basically giving you some data point for the quarter itself. As we look forward in the modeling, as you can estimate, we're somewhere in about the 400 basis points to 450 basis points difference or delta between the oil patch stores and the base of core stores themselves and with the control groups that we compare to. And generally, that's what we are modeling for 2016. When it comes to any other type of dependency relative to commodity, we really don't have any significant categories that we would be related to. And again, as in the past, for us, it's generally driven by unemployment in any particular economy. So if a plant goes out of business in a particular market, that would affect the store, but I don't think there's any specific dependency on a commodity itself.

Okay. And then the gross margin performance sounds like it's going to be quite good this year, especially as you're able to work through some of the excess inventory that's not going to be an impediment to seeing expansion. So where are the biggest drivers? Is it that all the systems and investments you've made in the last two years are kicking in in a more meaningful way, or are there some other factors that are having influence? Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Hey, Michael. This is Steve Barbarick. Every year, we talk about some of our margin drivers that being – you heard Greg talking about what we're going to do in exclusive brands, and it's still an opportunity for us to index higher there. The tools that we have today, whether it be price optimization or clearance price optimization, continue to work in our favor and act as a tailwind as we work forward. Strategic sourcing, we continue to see that as an opportunity. There has been some currency changes. While it's not a big part of our business and it's not material, we have gone back to our suppliers and challenged them and received some price decreases there as well. And finally, just overall better management and using science behind what we're doing, I think, is really benefiting us. So those are, I guess you could say, the buckets of opportunity we're looking at, and we manage this on a daily basis.

My last question is, Steve, there was some mention of being a little bit more promotional in the fourth quarter. And so, are you taking the posture that you're going to reinvest some of the savings back into the business and continue to be more promotional? Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Well, what we did – and Q4 was interesting. We took some strategic markdowns on some clearance activity that we had, knowing that we had Christmas right here in front of us as well. Because a lot of the seasonal products, such as men's shirts, ladies' shirts, while we're not in the fashion business and we're not hung out with a lot of inventory there, we also saw it as an opportunity to fiscally be responsible, take some key markdowns in the quarter and make sure that we pushed out as much of that product as we could. What we did carry forward mainly is in our insulated, as Tony said, and heating business. So we will use the dollars that we've got strategically. But you heard Tony talk about the look forward and what the margin forecasts are, and that's as best as we can give you at this point.

Understood. Thanks for all the commentary.

Thank you. We'll go next to Chris Horvers with JPMorgan.

Thanks. Good evening, guys. So first, a clarification question on the extra day in the fourth quarter. So when you report comps, will you give it on a comparable days basis for the fourth quarter, i.e., the same number of days? Or is that extra comp day an add-on to the overall comp that you report? And thus, when you're guiding to 3.5% to 5%, does that include an extra day that would help the overall fourth quarter report? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Chris, this is Tony. It does get a little complicated, and I know that Christine cannot wait to handle these calls on the extra week. But I want to say the answer is yes to both of your questions. We will have the same comparable days when we report 2016 comparing to 2015, the same weeks and the same days. In this case, there is obviously one extra day in 2016 where we were closed last year at this time. So, it will be included in our comp sales increase as well. So I want to say that the answer is yes to both of your questions.

So I guess asked more directly, when you guide the 3.5% to 4% for the year, I mean if I just do one day over 365 days, is that essentially a net benefit of 25 basis points to 30 basis points to your comp guide for the year? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Potentially. But I want to say that the one day is in the last part of the year, and it's not a particularly strong day. It's in the last week of that year and may not be a strong day. But generally, you can look at it in that respect relative to the fourth quarter.

Understood, understood. And then as a follow-up is you referenced the Texas oil patch versus the South. So does it sound like the South decelerated as well for the chain? And that's why – I mean one would have expected the overall South to be doing better, and it sounded like Texas gapped out (33:35) versus the overall chain. But it also sounded like the Southern region also gapped out (33:41). So is that accurate? And what stores for you are – or what states for you are in the Southern region? Thanks. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah. What we were trying to outline, because we didn't want to be misleading and be a little bit more transparent, obviously the chain – because of the cold weather up north, the overall chain comp was fairly low. So we felt that if we compared it to the Southern stores, it'd be a more fair comparison. So that's all we're trying to highlight there. We felt that the South did relatively well. It was a positive comp. And we thought a very reasonable comp relative to the performance of the company. Generally, when we talk South, we're talking pretty much Florida through Georgia, all the way to Louisiana. So we think that it's a reasonable comparison. We've also done some additional detail analysis where we try to identify what we believe are good control stores. And we came up generally with the same delta between the oil patch stores and the chain. So generally, the general direction again is there is a delta between the oil patch stores. But Texas as a whole, I think some of the key messaging around it is that non-oil patch Texas stores perform well. And they're right up there, actually slightly above chain average, as well as the transactions are positives across the board as well. So even in some of the oil patch stores, we're driving transactions. And that's what brings us to our assessment that it really relates more to the oil-related merchandise, which tends to be higher ticket. And that we're still getting the transactions and the footsteps coming through the stores. So we feel pretty good about Texas and the way it's performing, giving what we hear relative to some of the other companies that are struggling in the oil patch areas. Gregory A. Sandfort - President, Chief Executive Officer & Director: Hey, Chris. This is Greg. Just to kind of clarify, too. These Texas stores have been in place for a number of years in these oil patch regions. So as that business accelerated due to the drilling and all the things that were occurring there, we kind of rode the wave up. We're now riding kind of on the backside of that bell curve down. And these are still very viable, very profitable stores. But they're not comping at the same level they may have been as they got to the peak of this oil surge, as we'll call it. So don't be confused. We're still very happy with Texas, very happy with the stores in the oil patch. They're just at a different level today than they were the last couple of years because of the activity down there.

Understood. Thanks very much. Gregory A. Sandfort - President, Chief Executive Officer & Director: Okay.

We'll take our next question from Peter Benedict with Robert Baird. Peter S. Benedict - Robert W. Baird & Co., Inc. (Broker): Hey, guys. So two questions. First, I think for Tony, just on the D&A, which is starting to pick up here with the new DC coming in. Can you give us some help? Where do you see that coming in in 2016? I mean you talked about you're managing the CapEx so you can try to leverage D&A. But so would you leverage D&A at the midpoint of your sales guidance for next year? That's my first question. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah. Peter, relative to the D&A, we're looking a little bit higher than sort of the 10% to 12% range. So there will probably be a little bit of deleverage related to the depreciation. And again, that's going to be driven by the new DC coming on. So it's not overly significant, but it probably will run higher than the sales increase and thus the deleveraging. Peter S. Benedict - Robert W. Baird & Co., Inc. (Broker): Yeah. No, that makes sense. And then, Steve, just on the merchandising test, can you talk a little bit more – whatever you're comfortable talking about – in terms of the pet resets? What exactly is going on there? You talked about localization. What's driving those decisions? Was it some system stuff? Was it learning some HTT? Just give us a little bit more on the pet resets coming up for 2016. Thank you. Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Yeah, sure, Peter. First of all, I mean, understand that we don't have a silver bullet philosophy at Tractor. You've heard us say that before. We have a lot of tests and a lot of activities going out there. So while Greg referenced the pet business and the reset that we're doing there, there's a variety of other things we're doing inside the store. Relative to pet itself, we do see an opportunity. Typically, once or twice a year, we'll go through and do a fairly comprehensive assortment review on that business. We do see an opportunity for some expansion and some super premium brands that we have today, as well as expanding our exclusive brand of 4health, both in dry and in wet. So as an organization, we're constantly refining, and we believe in continuous improvement, and this is just one example of it. Peter S. Benedict - Robert W. Baird & Co., Inc. (Broker): Okay, great. Thanks very much.

We'll go next to Seth Sigman with Credit Suisse. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Okay, thanks. Hey, guys. A lot of talk about January being off to a stronger start. Tony, you snuck in a comment about the consumer being a little bit more cautious. Just wondering if you can elaborate on that point, and if there is something else that you may be seeing in certain categories or in big ticket that you're referring to. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah, it's interesting. We try, based on the data that we have, to see if there's any significant changes in the consumer. During the fourth quarter, obviously, the winter product didn't sell. But at the same time, we saw some strong sales in big ticket, and we alluded to trailers and some outdoor recreation equipment. In particular, we had some UTVs and even some riding lawn mowers that were selling in the fourth quarter. So, our assessment is that the consumer is still cautious. We know that they are either paying off credit cards or putting more dollars towards savings. But at the same time, they are willing to step forward to make some of the large ticket purchases. As we enter in, obviously, reading on the economy and on the consumer, it appears as if consumer confidence is starting to wane a little bit so we understand that they're going to be more cautious. But I think our perspective really is that they have basic needs and they continue to fulfill those needs and that we feel that we're properly positioned as that supplier of everyday basic needs for the rural lifestyle. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Okay, understood. And then a question on the West Coast DC, I think you've outlined some of the costs for 2016. Can you walk us through some of the potential sales benefits, if any, and whether that's reflected in the guidance? For example, stores being fulfilled by this DC historically have been much further away. I mean how does the replenishment cycle may be changed, and are there opportunities for maybe better localization and things like that? Thanks. Gregory A. Sandfort - President, Chief Executive Officer & Director: Hey, Seth. This is Greg. I think the key difference here is that having a DC that is within a 250- to 400-mile range of our stores, as you look up and down the coast and as we go up and through the Montana/Utah areas, is the benefit here is we can run product to those stores on a more timely basis. And if there's something that happens within their sales trends that needs to be addressed more readily than once a week, like trucks moving from Waco or from Waverly, that's a big advantage. The distance between our store and our DC now is much closer. We can push goods to those stores much faster. And we'll learn from the replenishment cycles here, how many days we can take off of that. But being closer has its advantages, particularly if there's a weather event or something that we have to react to when business tends to trend faster than what maybe we've seen from a steady state before. So that's the advantage. I can't tell you how much sales it will or won't bring. That's a hard thing to judge at this point. We've only got 50-some odd stores running today. We'll have 120 stores by midyear, so we'll know more really toward the midyear. Seth I. Sigman - Credit Suisse Securities (USA) LLC (Broker): Got it. Thanks and good luck.

We'll go next to Jessica Mace with Nomura Securities.

Hi. Good evening. My first question is on the test of the loyalty program. I was wondering with your strong transaction trends, if there's anything you've been able to learn in these early reads about new and existing customers. Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Jessica, we're still very early into this at this point. Because we never had 100% attribution before, now we're getting that with these customers that are part of the club. So now, we're going to know how often they shop and what their purchasing patterns look like. So at this point, it's difficult to say. We can bounce it against our existing database. But again, we're still very, very early into the game at this point.

All right. And then my second question is on the exclusive brand portfolios and the opportunity for 2016. You talked a little bit about the pet reset, but anything else in the pipeline that you expect to drive that business this year? Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Yeah. I mean, again, we've got a number of exclusive brands and a product development team that's constantly working to refine what we're doing there. We recently, in Q4, had a tool event in Q4, and we did really well with some of our tool brands in the event itself. We rolled out TotalCare, which is a premium bird feed line that's a sub-brand under Royal Wing. What you're going to find later in the year is or do more line of livestock feed, and equine feed is going to be relaunched and we're very excited about that. And finally, another thing that we did just recently is our Retriever product which is also in the pet food line. We're trying to treat a lot of our brands to be more of a national brand. And so we did some bonus bags and we tried some different things with the line of Retriever, and we found that we saw a nice increase in sales of that product, and some of which we took from our grocery brands which really benefited us. So there's a lot of activity going on right now. And as Tony mentioned, for us to achieve our margin goals for 2016, we're going to have to really put the pedal down here.

Great. Thanks very much. Gregory A. Sandfort - President, Chief Executive Officer & Director: Thank you.

And we'll go next to Stephen Tanal with Goldman Sachs. Stephen Vartan Tanal - Goldman Sachs & Co.: Hey, guys. Thanks for taking the questions. So wanted to just quickly follow up on the pet assortments. Net net, does this mean that more stores will be getting premium product? Is that the right way to think about it? I know you sort of stratified the stores into kind of three different buckets. That's an interesting tidbit we picked up when we were down there. Any way sort of to talk through kind of what the tangible outcome of this? I heard the more premium brands, which is great, but anything else you can share would be great. Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Well, the only thing I probably would share is, in addition to the expansion of some existing brands like Blue Buffalo and Taste of the Wild, we're going to be launching Natural Balance this year, which is a new brand that we haven't had. We're excited about the launch. We know that there's some pretty good market share out there today, and that product will be rolling in in the next couple of weeks. And we also look, like I said earlier, about our 4health line which continues to perform very, very well. And I would tell you we believe it's bringing in even new customers that never shopped our stores before because it's got a good penetration nationally at this point. So a lot of work being done. We continue to dense pack the footage that we're using inside the store, and we're getting better dollars and profit per square foot as a result. Stephen Vartan Tanal - Goldman Sachs & Co.: Great. And just lastly, as I think about sort of the cadence of sales, obviously January did start a bit warmer. Any color on how you think about the comp in the first quarter versus the full-year guidance? Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Yeah. I'll take that. This is Steve. You've heard Greg say earlier that the colder weather in January did benefit us. Tony said the same. But I just remind everyone that we had a relatively cold February last year as well. And as Tony said, Q1 also includes spring business. And March is a very important month for us. We typically like to be judged on the half and not on the quarter as a result of the way our fiscal quarters work. So that's what I would say to this point. It's still very early in the game here on this one. Stephen Vartan Tanal - Goldman Sachs & Co.: Okay. Thanks a lot.

We'll go next to Simeon Gutman with Morgan Stanley. Joshua M. Siber - Morgan Stanley & Co. LLC: Thanks. It's Joshua Siber on for Simeon. The 3.5% to 5% comp guidance that you guys laid out, that's better than what's been initiated the last couple of years. Did you raise it to acknowledge that you're going to push the business harder from a merchandising perspective, or is it just increased confidence overall? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: I think there may be a few of those considerations as well. But obviously, we were disappointed in the sales in the fourth quarter because of the weather. And we're hoping that some of the normalization you'll see at the fourth quarter bounces back next year. We've added that component to our full-year forecast as well. So, I think that's one of the main drivers as well as the initiatives that Steve's been talking about as well. We do have the extra week, so you obviously you need extra comp days. So those are the considerations, and those would be the reasons why the comp tends to be just a little bit higher than what we normally have forecasted. Joshua M. Siber - Morgan Stanley & Co. LLC: Okay. My follow-up, just looking back, you faced warm winters in the past. So I'm curious if there's anything different about how things played out in terms of customer behavior or your response to the weather in Q4. Gregory A. Sandfort - President, Chief Executive Officer & Director: Josh, this is Greg. I would say that this was the most – I've been with the company now going into my ninth year. I have not seen a winter develop quite like this where we had a very, very warm November and relatively warm December. So two months back to back, where temperatures were somewhat similar coast to coast, that's quite unusual. And El Niño effect was clearly there. We expected we would see some cooling down in December more than we did see at the end of the year. But I haven't had two years that I could tell you have been the same since I've been here with the company. And it's our job – and we talk about this a lot in the management group here and with the team, a lot about we have to address the business as if weather is a factor, but it can't be something that gets in the way of us doing business. Our customers buy close to need. The reason they weren't buying some of the cold weather product in November-December is they had no need for it. They now have a need for it because it's cooled down. We did a great job managing the inventories, kept things close. So really, I can't tell you there's any kind of pattern. Yes, we've had some warmer winters in the past but nothing quite like this one. Joshua M. Siber - Morgan Stanley & Co. LLC: Okay. Thanks a lot, guys. Good luck. Gregory A. Sandfort - President, Chief Executive Officer & Director: Thank you.

And we'll go next to Scot Ciccarelli with RBC Capital Markets.

Hey, guys. The first question is you talked about this three cold weather categories, the 400 basis point impact. Historically, how big have those three categories been in the fourth quarter? Gregory A. Sandfort - President, Chief Executive Officer & Director: Well, we generally don't disclose the specifics. Obviously, we have the seasonal categories. That runs about 20% to 23% overall for the full year. But that obviously includes the spring which includes a lot of the lawn and garden, riding lawn mowers, et cetera. But as sort of a bellwether, you can look at the seasonal piece. There's some pieces in there that probably are year-round seasonal type businesses. That can be replaced by other categories that aren't necessarily included, some of the clothing categories that are broken out. So you're somewhere of a range in that level, but we don't disclose the specifics.

Okay. And then just to try and clarify I think an answer you provided earlier, Tony, your comment that the customer is more cautious. I'm assuming that we should view that as an actual change in your view on the consumer and that it does go beyond just what you commented on the oil patch. Is that correct? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah. I would characterize it as last year, when we came into the year, the consumer confidence index was much higher. Oil prices were starting to come down. It appears as if the consumer – that it potentially would be a stronger year, and that is something that's in the back of our minds when we start to put our 2016 forecast and model together. As we came into this year, we still think that there are some positives. But at the same time, we do believe that the consumer could become more cautious during the year, and therefore that plays or enters into our equation as we do our forecasting modeling as well. So we could tend to be a little bit more conservative relative to how we started last year.

Okay. And yet your guidance of the 3.5% to 5% comp includes a more conservative consumer? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Correct. And as we talked earlier, the additional week, the additional comp day, the softness in last year's fourth quarter, it is the reason why the comp forecast is consistent with last year's forecast.

Yes. Got it. All right. Thanks, guys. Gregory A. Sandfort - President, Chief Executive Officer & Director: You're welcome.

And we'll go next to Adam Sindler with Deutsche Bank.

Yes. Good evening, everyone. So to go back to the comp again, is it fair to assume that 1Q will potentially be below the range and 4Q above the range with the second and third within the range? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: In this case – again, we don't give the specific guidance, but all four quarters are in a reasonable range within the range. Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Hey, Adam. It's going to depend upon if we get the spring weather in March. Tony always talked about we need to see something. That'll help, no question, for Q1. But you've got to believe that fourth quarter – it'd be unusual if we had another fourth quarter quite like this. So...

Right. Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: ...we would say, yeah, we would see opportunity there.

Okay. So just, I mean again, just very sort of unscientific, but looking at AccuWeather, going to be in the mid-40s and 50s through February in Columbus, Ohio, and in New York. We know you have a tough February. We know you have a tough March. Obviously, a lot depends on March. Is January above 3% to 5%? Gregory A. Sandfort - President, Chief Executive Officer & Director: Great question, but we won't answer that one, Adam.

Okay, okay. That's fine. That's fine. Okay, fine. And then just one thing that I've heard Tony sort of answer through the Q&A. He keeps on talking about the additional week and the additional day in relation to the comp guidance. But I thought the additional day was maybe like 20 basis points. And because you're lining up the week, the additional week doesn't really add anything. Is that correct? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: That would be correct.

Okay. Okay. And then just lastly on gross margin, why would fourth quarter be the lowest increase of the year? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah. Probably a good question. And we take a look at some of the detail. There's several components. And a lot of them are, I want to say, relatively small. We try to hit the highlights as we do detail analysis and work through some of the other impacts throughout the quarter. There's some variances. So when we look at next year, it's really hard to match it up. But they are – a lot of other impacts that are in the quarter. It could be as basic relative to new store discounts that flow through. We go back and we've been working with our vendors overseas, looking at discounts and getting adjustments for foreign currency. So it's a lot of these minor issues that impact margin that will make it a little bit more difficult comparison as we go into Q4.

Okay. Thank you. I appreciate it.

And we'll go next to Jaime Katz with Morningstar.

Hi. Good evening. Thanks for taking my questions. So I'm curious, you guys talked about drawing on your revolver maybe at slightly higher levels than in the past over the next few quarters. And I'm curious if there's been any difference in working capital intensity or how that's changed for you guys. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: There hasn't really been a significant change. Obviously as we worked our way through Q4 with the softer sales and the higher inventory levels, there's going to be an impact there. But our general philosophy is to continue to drive improved turns, although again it will be a challenge this year as far as improving turns as we work through some of the inventory coming out of the winter season. So there's been no change there. Where we've been focused over the last couple years is to continue purchasing under the share repurchase program. And that's really been the major driver as far as use of cash.

Okay. And then in the past, I know you guys had called out maybe the Northwest in 2017 for a possible distribution center and then maybe the Northeast thereafter. But I'm wondering if the ordering or anything like that has changed? And where you're finding the best opportunities to build out your footprint right now versus maybe where you thought they were last year, just if rents have gotten better in one location over the other? Gregory A. Sandfort - President, Chief Executive Officer & Director: Jaime, hi. This is Greg. As we said, we're going through our typical three- to four-year study right now. And I think once we're through that, we'll have better answers. Right now, with the West DC in place, particularly sitting there in Arizona, we can service a number of stores on the Western seaboard. But let us get through this analysis. We'll have probably more to talk about about midyear. And we'll probably bring that topic up again at that time.

Excellent. Thank you. Gregory A. Sandfort - President, Chief Executive Officer & Director: Thank you.

And we'll go next to Chuck Cerankosky with Northcoast Research.

Good evening, everyone. Just a quick question in looking at the fourth quarter customer behavior with the categories you mentioned being influenced by the warm weather. How does that relate to how customers put together their baskets and traffic if they're not in there for some of the cold stuff? Are there attachment rates that would accrue to a purchase of a heater or a stove that we just didn't see because of the weather? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Well, yeah. When we look at the basket and look at the transactions, it's very clear that we're still getting the footsteps. And so again our customer is coming in for their everyday needs. And the driver relative to some of the cold winter product really is related to the ticket. And the drivers that we talked about, some of the big ticket was 70 basis points on the average ticket. So we're still driving in the footsteps. And obviously we're very pleased with the positive transaction count increase. Obviously the basket might not be as big as they come into the store, because of the decline in some of the winter seasonal goods. But again it's really the strong transaction count that is driving the business.

All right. Thank you.

And we'll go next to Eric Bosshard with Cleveland Research Company.

Thank you. With the online efforts and what you're doing and the growth that you're seeing there – and I recognize that it's still a small piece of the business – but curious as you've started to dig into this, what you're seeing in terms of an evolution of your customers' desires or interests in online? And how big of an opportunity you think this is? And if you're thinking about that has changed as you've started to become more involved within this? Gregory A. Sandfort - President, Chief Executive Officer & Director: Eric, this is Greg. I would tell you that we are very delighted. As we have started to build up the content piece of the business and getting more information about product, that that is kind of helping us push through into the social space, as well as driving some commerce. So I said it's less than 1%. It's growing rapidly. We had to get the new platform up. Rob Mills' team did a wonderful job working with Letitia, who is our VP of that area, really getting this platform up and running. We've still got some tooling to do to it. What we're seeing is customers are going to the Web to research. Then from the Web, they're starting to look at the option of buying it online, picking it up at the store or having it shipped to the store. Right now, we can give them the option of ship to store. We can't give them pick up at store. And there's a difference. One is shipping it to the store from a DC or from a third party. The other is it's actually being held there at the store for the customer when they bought online. So we are seeing that. And then this whole special order component that's coming online later this year. I'm very excited about. It's one of the areas that our stores struggle with daily, trying to leaf through books and catalogs and that. They'll take all of that out of the way. And they'll be able to go to the screen there at the service center that's in the middle of the store and pull information up, address the customer. The customer can transact there. And we'll be able to even give them an ETA of when it's going to be there and so on. No one in our space is doing anything quite like this, and it's pretty exciting. But how big will it be over time? Hard to say.

Thank you.

And we'll go next to Joseph Feldman with Telsey Advisory Group.

Yeah. Thanks, guys. I have a – wanted to ask also about e-commerce actually. Again early days in it, I understand that. But anything you can share about the type of customer that you're seeing? Or maybe what the customer is purchasing, if that's different in any ways than you would have expected, or exactly even what it is relative to what you see purchasing in the stores. Gregory A. Sandfort - President, Chief Executive Officer & Director: Joe, it's Greg. A couple of things we've noticed. They have no issue, no problem at all, buying large ticket, big ticket items because we have a delivery process that we can get the product to them, basically drop-shipping it or taking it LTL, whether it's a safe or riding lawn mower, what have you. They don't have that advantage necessarily when they buy that at the store. That's typically bring your own truck, bring your trailer, or we can arrange for a delivery from the store to your property. So that kind of surprised, I think, all of us. We still have a high component of footwear and apparel that's coming through. But they're buying across the store, ironically. And I think the more that we put product content out there and we're able to draw that in and expand the envelope with the endless aisles and some categories of things with tractor parts or some of that hard-to-find type of items that the only tractor will probably have versus some other store, that's where the real opportunity is going to be. It's a true area for destination for us as we can evolve this. And I think it's quite exciting. We're not doing things like feed and food necessarily in a big way. We are selling some pet food, but this is really the kind of things that only Tractor Supply sells or that the customer is saying, boy, it's easier for me just to buy it online and have it delivered to my property.

Got it. Thanks. And then just another sort of unrelated question. But you touched on rolling out a new special order system in the stores. And I just wanted to get a little more color on that, like what's involved with that rollout and how that will work, and training maybe, and expense related to that, and what specific items people do need to use that system for. Gregory A. Sandfort - President, Chief Executive Officer & Director: Well, today, we have a special order business that is, I would say, not substantial, but significant. But it's done in a very cumbersome way. We put the burden on the store to really do the research, to make the phone calls. And there's some things we can work with them on to get store support center to aid that process. But it's clunky. The new process will be very fast, very easy for both the team member and the customer at the store, and it can transact at the store, and it's going to give us real-time data. We lock in the order. Here's the price it's being sold at. Here's the ETA of delivery into your home or to our store for pickup. We think it's going to be used primarily, again, for the kinds of things that you can't find in the store or the kinds of quantities of things that you're buying that you need quite a few of. If someone comes in for rake teeth on a particular piece of equipment, and we have maybe 20 in the store but they want 100, that's something you can go ahead and just place as a special order and get it to them. Or if it's a – we carry five SKUs of the category and we now have the ability through the longer tail to have all 50 SKUs. The customer has the choice to be able to buy deeper into that category or from that vendor. So I'm excited about it. I can't tell you how large that can be over time, but I do think that our guys in IT have done a wonderful job working with the stores to understand the need, to understand how this needs to work, take the work out of it for both them and the customer, make it easy. And I think it's going to be something we'll be talking about at greater length as we get toward the end of the year.

Great. Thank you for the update and good luck with the quarter.

We'll go next to David Magee with SunTrust.

Yeah. Hi, everybody. Gregory A. Sandfort - President, Chief Executive Officer & Director: Hello. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Hey, Dave.

A couple of questions. One is you mentioned deflation this year being a lesser dynamic, less throughout the year. Can you just quickly talk about some of the puts and takes there? What's the biggest variable in determining that? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Clearly, the biggest variable is the impact on feed, and that's what's moderated. Obviously, oil prices have come down. So oil-related products, there's some deflation in that category. But it tends not to be as impactful as what we had experienced with feed. So we anticipate that it'll be flattening out over the course of the year. Obviously, that's going to be dependent on where oil goes. And obviously, each conference call, we'll update you as to what we expect out of deflation or inflation.

Thank you, Tony. And then just secondly, with regard to the Neighbor's Club project that's going on now, if this turns out to be a big success over the next year or so, what metrics do you think will be moved by it at the store level? Is it primarily traffic, or do you think margins might be enhanced? How do you see that evolving? Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Well, this is Steve. One of the values of having the loyalty program and a pilot is to test exactly that. Right now, we're getting our first seasonal rewards out to the customers that have adopted or signed into the program, and we're going to see what response rates we get. The other thing strategically that we talked a lot about internally is the importance of personalization, and Greg's talked a lot about the digital side of our business and what we're doing on the Web. Getting these e-mail addresses and being able to talk to consumers the way they want to be talked to on their purchase history, we are finding that we've got a lot better open rates on the e-mails that we're sending out. And we believe by continuing to talk to them in a way they want to be talked to, we should see better traffic in our stores and increase in sales. So again, part of the pilot and what we're trying to learn right now before we roll it out to more stores is to quantify what that's going to look like.

Great. Thanks, Steve. Good luck. Steve K. Barbarick - Executive Vice President & Chief Merchandising Officer: Thank you. Gregory A. Sandfort - President, Chief Executive Officer & Director: Thank you.

And we'll take our last question from Seth Basham with Wedbush Securities.

Thanks a lot and thanks for taking my questions. Gregory A. Sandfort - President, Chief Executive Officer & Director: You're welcome.

The first issue I'd like to ask about is new store productivity. By our math, it looked like there was a bit of a step-down in new store productivity this quarter. Curious to know if there's any rationale for that with timing of store openings or anything else. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yes, Seth. When we look at the overall productivity of the new stores, in aggregate, our new stores are hitting our pro forma. So we feel very good about that. There are some pockets in particular in one of our new markets that we went into over the last year-and-a-half, Utah has come out slower than we had anticipated. So that's pulled the numbers down a little bit. And so, sometimes in some markets, it's going to take a while to build and strengthen our positioning in particular markets. But the one thing that we really like is how the stores have comped particularly in the West as well. So in some cases, the stores may come out a little bit lighter in sales than we had anticipated, but overall, they're coming out consistent with our pro forma, and they are ramping at a nice clip. So as we look overall at productivity, what's important to us is as we approve the stores that they live up to the pro forma that we've designed for each store. And generally, over the years, we open up stores somewhere between $2.8 million and $3.2 million. Each year's groups of stores is going to vary, but we'll generally be in that range. So I would expect as our chain continues to grow substantially that the productivity will sort of stay in this range or at times flatten out a bit. But relative to 2015, there's nothing in that mix of stores that caused any sort of differentiation to how the stores have performed in the past.

Okay. Got you. I would think that in the fourth quarter, with the West doing so well and a lot of your stores concentrated at West – your new stores concentrated at West, that should be a benefit to new store productivity. But it seemed to be a step-down. Does that suggest that there is any further weakness in the Utah region or any other spot of the new store opening fleet? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: No. What we experienced was nice comps. And like I had said, if the stores come out a little bit less than what had been pro forma-ed, we generally see a nice comp ramp. So again, as long as the stores are consistent with the pro forma that we have out there, we believe that we'll get a nice return. The IR will be nice and firm and continue to grow the ROIC.

Got it. Okay. Then lastly, just to make sure I got this right – I may have missed it because we got dropped. But in terms of Texas performance overall, was 350 basis points weaker in comp sales versus the normalized chain average of low-single digits in the fourth quarter? Is that correct? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Yeah. That's in the ballpark. Correct.

Okay. And you expect that sort of delta to persist through 2016? Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Correct. That is in our modeling for 2016.

Perfect. All right. Thank you very much and good luck in 2016. Anthony F. Crudele - Chief Financial Officer, Treasurer & Executive VP: Great. Thank you.

Thank you, everyone. That does conclude the question-and-answer session. I'd like to turn the conference back over to Greg Sandfort for closing remarks. Gregory A. Sandfort - President, Chief Executive Officer & Director: Thank you, operator. As we look ahead to 2016, we are excited about our opportunity for growth. We will continue to invest in infrastructure, system improvements and the omnichannel to move our business forward as we target mid-teens earning growth. Thank you for your support of Tractor Supply, and we all look forward to speaking to you again in April regarding our first quarter of 2016 performance.

Thank you, everyone. That does conclude today's conference. We thank you for your participation.