Christine E. Skold - Tractor Supply Co. Gregory A. Sandfort - Tractor Supply Co. Kurt D. Barton - Tractor Supply Co. Steve K. Barbarick - Tractor Supply Co.

Peter S. Benedict - Robert W. Baird & Co., Inc. Matthew McClintock - Barclays Capital, Inc. Dan R. Wewer - Raymond James & Associates, Inc. Charles Cerankosky - Northcoast Research Partners LLC Peter Jacob Keith - Piper Jaffray Seth I. Sigman - Credit Suisse Securities (USA) LLC Simeon Ari Gutman - Morgan Stanley & Co. LLC Michael Louis Lasser - UBS Securities LLC Steven Forbes - Guggenheim Securities LLC Stephen Tanal - Goldman Sachs & Co. Scott A. Mushkin - Wolfe Research LLC Benjamin Bienvenu - Stephens, Inc. Christopher Michael Horvers - JPMorgan Securities LLC Seth M. Basham - Wedbush Securities, Inc. Brian Nagel - Oppenheimer & Co., Inc. Scot Ciccarelli - RBC Capital Markets LLC Alan Rifkin - BTIG LLC Adam H. Sindler - Deutsche Bank Securities, Inc. Mitch van Zelfden - SunTrust Robinson Humphrey, Inc. Joseph Isaac Feldman - Telsey Advisory Group LLC Denise Sara Chai - Bank of America Merrill Lynch

Good afternoon, ladies and gentlemen, and welcome to Tractor Supply Company's Conference Call to discuss First Quarter 2017 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. Please be advised that reproduction of this call in whole or 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. Christine, please go ahead.

Thank you, Camille. 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. And 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 Chief Executive Officer. Greg, please go ahead.

Good afternoon, everyone, and thank you for joining us. On the call with me today are Steve Barbarick, our President, Chief Merchandising and Marketing Officer; and Kurt Barton, our Chief Financial Officer. As was previously disclosed in our business update on April 11, a challenging weather played a significant role in our first quarter results, with a very mild January and February and cooler spring temperatures throughout most of March accompanied by March winter storms. The demand for both winter and spring seasonal products was clearly diminished for the quarter. In the markets where weather and sales were more favorable, we pulled forward several spring seasonal receipts, and where weather was less favorable, we acted aggressively addressing excessive winter product, which by quarter end resulted in a clean transition to spring. In April, the weather has turned more spring-like and our consumers are responding positively to our assortments and sales have improved. We know from our many years of experience, the spring sales can shift between the first quarter and second quarters and that is why we have consistently stated that our financial performance can be best accurately assessed, by the halves and not by the individual quarter's business. Looking ahead, we understand that the retail landscape is changing rapidly, and our customers' expectations are evolving as well. Having the right products in stock at the right time and having those products competitively priced and readily available, whether in-store or online is what our customers expect. The shopping experience across all Tractor Supply shopping channels must be seamless, effortless and consistent. And by adding a level of exceptional customer service, we can meet their needs better than any of our competition. With this, evolving landscape in mind, we are making strategic investments throughout the organization to meet the ever-evolving expectations…

Thanks, Greg, and good afternoon, everyone. For the quarter ended April 1, 2017, on a consolidated year-over-year basis, net sales were $1.56 billion, resulting in net income of $60.3 million and earnings per share of $0.46 per diluted share. Comparable store sales decreased 2.2% versus a reported increase of 4.9% last year. As a reminder, our Q1 2017 comparable store results reflect the calendar shift associated with the 53rd week in 2016. Adjusting for the week shift, last year's comparable store sales increase would have been 2.6%. As we indicated in our last earnings call, we anticipated Q1 to be a challenging sales quarter. If you recall the first quarter last year benefited from very cold weather in January, which drove the sale of winter related items. Q1 of last year also benefited from both warm March temperatures and an early Easter, which drove sales of early spring merchandise. Unfortunately, we experienced a complete opposite situation in first quarter 2017. In this year's first quarter, January and February weather was very warm, and we then had cooler temperatures and snow in March. January and February's warmer than normal conditions of this year impacted demand for winter seasonal products. Additionally, the March winter storms, which primarily hit the Midwest and Northeast, but also reached down into parts of the Southern regions quickly silenced any early demand for spring seasonal products. The impact on comp sales from softness in seasonal products was relatively equal between winter and spring seasonal goods. Sales were weakest in the Northern regions of the country where the impact of weather was most pronounced, both in winter and spring seasonal products. The Southern regions were less impacted by the weather conditions, but we're cycling a tough compare from last year's strong performance. The difference in comp sales performance…

Thank you Our first question comes from Peter Benedict from Robert Baird. Peter S. Benedict - Robert W. Baird & Co., Inc.: Hey, guys. Thanks for taking the question. I guess I'll use my one on some of the online stuff. Thanks for some of the color on BOPIS. Any more metrics around kind of just how online sales – I know it's a small number for your guys, but how it's been growing, what percentage of the business it is? And then what else are you working on beyond Buy Online Pickup in Store, those types of things in order to better position the company for omnichannel selling in the years ahead? Thank you.

Yeah, Peter, this is Steve Barbarick. And I would tell you, we've made a lot of advancements over the last couple of years and we continue to make traction as we go forward. To give you some bullets into the quarter and what we saw, our web visits were up about 26%. And what's also very exciting is that, if you look at the number of hits we've got the store locator, we had nearly 5 million hits to store locator for the quarter, which is up about 40%. So we know our customers are going online, they're not just looking at content or looking to buy, but also to look where our stores are located. Couple of other tit bits here that I would share with you. Our mobile traffic was over 60% and up to last year, and we continue to see Drop Ship as a real viable source for us. If you combine what we've done now direct-to-customer, as well as what we're seeing with Buy Online Pickup in Store, the early results, I will tell you, as we move into the back half of this year, I suspect for the full year we will be between probably 1% and 2% of sales, so we're seeing nice growth there. Then if you look at some of what we're doing in terms of capabilities, as Greg said, evolve to what customers needs, we talk a lot internally, and I think, we introduced this to you all at the Investor Meeting this concept of ONETractor. And it's really making sure we're taking the care of the customer anytime, anywhere and anyway. And we're working on things like enhanced search, enhanced checkout. We've got a comprehensive pricing tool that's going on out there for us, we can look at what the competitors are doing, even going as far as taking a look at what we're doing inside the stores to better take care of our customers, when it comes to Buy Online Pickup in Store. So there is a lot of things and a lot of capabilities that we have that we're working on and that also includes what we call the stockyard, which is a special order system in a number of our stores right now. So I guess, what I would tell you is that we're not sitting back, we're moving forward and we've got a plan to do just that. I know that was a long answer, but I wanted to make sure that I was comprehensive as I could be.

Thank you. Our next question comes from Matt McClintock with Barclays.

Hi. Yes. Good afternoon, everyone. I guess, I'll focus a little bit on the weather and ask the question – two part question. The first one is the West Coast mid-single digit comp pretty outstanding. I know that that region has been out-comping the rest of the store base for a while now. Can you just kind of remind us the spread between how the West has been performing versus the rest of the chain? And then, as the weather did improve, did all product categories improve in line with how you would expect, meaning do you see any area, Steve, specifically a weakness from a merchandising perspective that maybe you could do better in? Thank you.

This is Greg. I'll start off and I think Kurt and Steve may join. First of all, the Western region, as you know, we had a little bit of a slow start there in one state, but once the consumer recognized and understood who we were, we started seeing business accelerate. We don't typically comment on the basis points difference between West, East, North and South, so I'll kind of pun on that one. What I can tell you is that the West is doing quite well. I think there has been a real challenge in the retail environment in general, but our Western stores are performing very, very well. Now, there is more new stores in the West so – and I needed to make sure that you understand that caveat. I think they're less weather dependent as well, so that gives us a little bit of a benefit, and there's some things we're learning about the West, not only through the digital capabilities that we're also rolling out there, but how this consumer – their consumption, it's a large recline community. And I think for us, it's a little bit like the Deep South in Texas. We've got a consumer base out there that needs us, wants us to be there and they're engaging with us at a very high level. So, you'll see us continue to expand in the West eventually maybe talking about more distribution capability toward maybe the Seattle area at some point.

Yeah. And I would just add Matt that talking about the seasonal shift here, Greg talked earlier and so did Kurt about the softness we saw in January and February, and that really impacted a lot of our cold weather businesses. It was exciting and we thought we get into early spring and so we were quite nimble, we brought some receipts in early, and thought that we could capitalize on an early spring season similar to last year, but then the weather turned on us. Once we got into April, you would get, basically what you would expect. We saw the OPE lines start to ramp-up, a lot of our spring seasonal businesses take off, as well including grass seed. Now, we do have one less day in the second quarter, and that already took place in April. But if you look across the board, it's pretty much shaping up like you would expect for a spring season.

Thank you very much.

Our next question comes from Dan Wewer with Raymond James. Dan R. Wewer - Raymond James & Associates, Inc.: Thanks. And Steve also kind of follow-up on that question with two parts. When you talk about April looking like a typical spring season, does that also imply it's back in that range plus 2% to plus 3%, that you're guiding for fiscal year 2017 or is it just an improvement from the minus 2% that we had in the first quarter? And then the other question, I want to see if you could answer, is on the original gross margin guidance of 25 basis points to 40 basis points for this year. I knew that the pricing optimization was part of the other margin driver that you're expecting. Do you think it's still a good environment to be pushing higher pricing in submarkets given the tepid demand?

Dan, this will be a two part answer, because I'll take a piece and Steve will take a piece. On the April trend moving forward, the only thing I can tell you is you said it, not me, yes we are in the range of where we forecasted for the year. Dan R. Wewer - Raymond James & Associates, Inc.: Okay.

And we're pleased with the initial response, but it's early. We are only 2.5 weeks in, but as we said before when you see what is shift, it can have a dramatic impact on some of these categories in our business. Steve, you want to talk about gross margin?

Yeah. I would just say that, Dan, we always talk about rate and share and there is a balance between the two. We are certainly not going to do anything that would put us in a position to be uncompetitive. So when you use a pricing tool and you've got upwards of 15,000 SKUs in the store, not all of them have the same level of elasticity. So we're going through – we're going to be very careful, very surgical in the way we use the tool. I would say at this point the tool is not cost us any share, if anything it's benefited us both ways, because we have come down on some prices and up on others and we will be very methodical on the use of that. Dan R. Wewer - Raymond James & Associates, Inc.: Okay. Thank you.

Thank you.

Our next question comes from Chuck Cerankosky with Northcoast Research.

Good afternoon, everyone. I was wondering if you could talk a little bit about Petsense in terms of, is it meeting expectations, could you carve out what its sales might be approximately for the quarter? And then where in New York will that new distribution center be and when might it open? Thanks.

Okay. Well, that was about five questions and one there, Chuck. So I'll start off with Petsense. Very pleased with how the Petsense business is performing. As I said 2017 is a year of kind of the shakedown to understand the business more fully and to look at the expansion opportunities. So, we still think this is a company that has tremendous store count, as well as online and Buy Online Pickup in Store capabilities, which we'll talk more about as we get further into the year. But Petsense is a winner, we're very excited about it and it's teaching us a few things about pet special that we can use also in Tractor. What else?

DC.

DCs. DC is going to be, I think we've already made that announcement...

Yes.

Official, it's in Herkimer, New York. Frankfurt – Herkimer it's in that area, it's in that area, it's kind of a small town in Northern part of New York – but Northwestern New York. But the location was chosen because of its importance to helping us broaden our expansion capabilities as we add more stores into North. As you may know, and we talked about this a few calls back that we needed more capacity in the Northeast. The Hagerstown facilities and there are two of them are somewhat running at maximum. That facility will be fully functional at the end of 2018. So, don't expect us to – we'll start adding some stores in 2018 there, but 2018 into 2019 will be the final build outs as we move forward on for store base there.

Any numbers you could give us on what Petsense contributed to sales in the first quarter?

We don't really break it out separately, and honestly Chuck, we don't do that for competitive reasons. So, as it grows to be a larger percentage, we'll talk more about that maybe later in the year first to next.

All right. Thank you.

Thank you.

Our next question comes from Peter Keith with Piper Jaffray.

Hey, thanks for taking the question.

Sure.

Greg, I was wondering if you could comment, in the press release and in your prepared remarks, you referenced multiple times that retail landscape is changing rapidly. Could you provide maybe a little bit more perspective on that with the specifics and I assume it may be related to e-comm, but maybe you can enhance the detail?

Okay. A couple of things that I would say to that, Peter, one is that we noticed in our own business about four years ago – four-and-a-half years ago, the amount of consumers that were coming to us through mobile devices, and we kept scratching our heads, on why is mobile so important. Well, as we talked about as a group and we went out with visiting stores, it's very simple. The landscape change, because that's the way our customer in the real community can communicate with us and that's how they really find product online. We see there's not a lot of broadband in a lot of these markets where we have stores. So, cell towers are easy and for them to use mobile was important, so we quickly started to mobilize everything that we do. The second thing we were learning is Buy Online Pickup in Store made a lot of sense to us as step one, versus that fulfillment, which we're already doing to Drop Ship and such through our Franklin facility and with a lot of vendor base that we have out there. But we said, our customers buy projects generally and they come in, they want to know that the product is there before they make the trip. Remember, they're traveling on average of 10 miles to 15 miles to get to our stores usually. So when we turned it on, we thought let's just watch and see and exactly what we thought was going to happen has happened and that was last fall, well I'm proud to say we've got to roll the entire chain in less than an eight-month period and it is driving our online business. It's also bringing customers in to four wall. And as I said in my comments, these…

Okay. Thanks. That's a great detail. I appreciate it.

Our next question comes from Seth Sigman with Credit Suisse. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Thanks for taking the question. My question is around the promotional activity you discussed. Can you just elaborate on that, and whether you think, it was effective? And then the second part of the question, sort of ties in just around deflation, which has been a drag. Is that purely just flowing through the impact from lower input cost or is there any evidence that maybe it's getting a little bit more competitive in some of the consumable categories? Thanks.

Seth, this is Steve Barbarick. And one of the things, we talk a lot about is, I mentioned it earlier about our ability to be nimble, and whether it'd be using our inventory or using things like promotion to take care of our business and making sure that we continue to keep share up. In the first quarter, we did a few things. We did a coupon online to see what kind of impact that might have and we tested that across the network, and the response was very favorable with our customers. We also did a few other little events that we thought might have an impact. I would tell you that, it wasn't material in terms of overall sales to the business. It did have a little bit of a margin erosion, but we've always talked a little bit about the fact that, we've got to make sure that we're using all of the arrows in our quiver. This would be one of the arrows that we used in Q1. I don't anticipate further promotion needing to be used throughout the remainder of the year based on last year's promotion, but we want to make sure that we've reserved the right to use it, if we need to. So that's what I will would tell you about promotion. In terms of deflation and Kurt and I may tag team this one. Typically the way we view that is input cost first, and then what our retail selling price is second. So, what you hear when we talk about deflation isn't us just selling at lower retails, it has to do first and foremost with the impact of commodities.

Yeah. No, I will just say I agree, because Steve hit that important point, Seth in that, it's the input costs that are a key part to that. So, our deflation calculation is not quoting situations where there maybe retail declines without a cost change. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Okay. Thank you.

Our next question comes from Simeon Gutman from Morgan Stanley.

Hi Simeon. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Hey, Guys.

Hey, Simeon. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Hi. So, I too have one question, but I'll make it part A and a part B. The part A, Greg I'd love to hear your thoughts on the private transaction in the Pets space last week, if – how you think about it, if you're expecting to see a more rational competitor, I'm not talking about the physical one, the digital one? And then my second question, and Greg, you mentioned there's been a lot of choppiness in the last year on comps, and the first quarter being no exception. We're kind of hearing from other retailers, we're hearing weather was a problem and then we're starting to see guidance that looks more normal for the second quarter. So given that the choppiness that you've seen, I guess, how do you get confidence in let's say, what a normalized run-rate looks like a 2%, 3% or 4%, and correct me if I'm wrong doesn't your comparison in this quarter you're in, doesn't it get tougher as the quarter goes on?

All right. Let me first comment about – and let me not comment about the PetSmart Chewy scenario. All I can tell you there is that we keep our eyes and ears open to what's going on both online and in bricks-and-mortar. We think we have a powerful combination with Petsense and Tractor right now, and there is a lot of growth for us in Petsense to take that business digital and explode it. And in the local markets, where I can push from store delivery, it's going to be a huge advantage for us as we go forward. So, as far as the private transaction there, that's probably the only way that it could have happened, to be honest, because as a public company, I don't think that many people could have absorbed the hit in earnings. Moving on from that to the choppiness, and why do I feel, we've got a more normal looking setup for second quarter and maybe beyond, and yes, there's some challenges. Simeon, when you see the business respond as we had hoped in the early part of April that we didn't see happen in the first quarter, it gives us great confidence. We've been in this business, all of us, Steve's been here 19 years, I've been here 10 years, Kurt's been here 15-plus years, and the rest of the team, we're not rookies to this, we've seen this before. I can remember a year, when the weather didn't break until Memorial Day weekend, and we blew the numbers away for the entire year. It was just, we were off to the races and never looked back. So, I think we're a little less concerned now that we've seen the business open up, and it's more in line with what we had expected. But as I said before, this is not a linear path. We could see some coolness, some softness, but we really feel good about what we're seeing right now, and our inventory levels have really come down quickly because of the amount of sales that we generated in the first two-and-a-half weeks.

Yeah. Simeon, Kurt. A couple things on that. So we continue to evaluate our long-term targets, and as just a reminder, our long-term targets that we've set is high single-digit total sales growth, which include some solid comp store sales in that picture. To Greg's point, one quarter of tough weather conditions or a couple of quarters there are not going to change our long-term targets. We still see the strength in the business, and our sales growth driving initiative ability to drive the high single-digit sales growth. One reminder is, when it comes to Q2, I think as was mentioned, in Q2, we do have one less comp sales day, that we know is part of the headwind that we're facing as part of Q2. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Thanks.

Thank you. Our next question is from Michael Lasser with UBS.

Hi, good evening. Thanks a lot for taking my question. Recognizing that you don't want to update your full year guidance until the second quarter, to get to the low-end of the your previous 2% to 3% comp guidance for the year, you will need to do at least 3% comp for the next few quarters. And over the last four years, you've averaged an annual comp of 3.4% and you've acknowledged that this number benefited from the expansion of few big ticket sales, growth in energy markets and the impact of deflation. So aside from deflation getting less bad, what is going to get better in order for you to consistently put you in the comp range that's necessary in order to hit your standing guidance?

Yeah, Michael. First as we said, given the seasonality of the business and the weather conditions in first quarter, we're not updating guidance at this time. Reminding that first quarter is the lowest volume sales and earnings quarter for that, that's the primary reason, it's about 15% of sales and earnings for the year. So at this point with being so early in the year and we recognize those factors that you brought up, at this point, it's just too early to give any guidance on the year.

Let me comment on, what needs to get better, Michael, okay. First of all, it's top-line sales, it's the categories that we didn't see response from in March this year that we saw in March last year, and we're seeing that. We also believe that the acceleration of our business in the digital space is feeding and fueling some of the things happening in the four wall store. We are talking with our consumer 24/7, they are interacting with us 24/7. As we learn, we reapply, Neighbor's Club has been a tremendous benefit from the standpoint of understanding this consumer better and being able to talk to them directly. And we're just getting really to start using some of that information. And then, I will tell you, we said it earlier, BOPIS has really been a wonderful addition to the business. What I like about is, it gives us both sides, it gives us the online component, it gives us the four wall component, and all we see for that is just continued acceleration. So there's a number of things, even within some product categories that Steve didn't mention, but he could, the things that we're starting to see work far better in some categories that maybe were a little more difficult the past two years, they're starting to open up again. And the energy markets down in Texas seemed to have settled down now and we're starting to see the movement back in those markets in sales. So, there is a lot of positive things that we see going forward, and that's why I would guess to say at this point, it's best to looking us at the halves not the quarters.

And Greg, if I could just add one quick one? Because of the addition of Petsense, we can't calculate your new store productivity, what was your new store productivity in the first quarter and how does that compare to what it was last year?

Sure, Michael. I'll take that one. Yeah, there is a couple of unique factors in the new store productivity calculation I understand that, so I'll give you a little bit of data points on there. So the unique items are the week shift and the impact it has on this year, so the week shift into a higher spring sales week also long without Petsense impact the new store productivity when you're looking at it from the external data that you have. Internally, as we adjust it for those two items, the first quarter new store productivity was slightly below the prior quarter, but nothing significant in that decline and I'll just tell you that the new store performance continues to be in line with our pro forma calculations and those new stores continue to contribute at an elevated comp consistent as what we've seen in the prior year.

Our next question comes from Steve Forbes with Guggenheim Securities.

Good afternoon. I guess maybe I wanted to focus on the GURA right, the service initiative you have going on, maybe if you just comment Greg on how that process is going, what metrics you're looking at to measure the impact on service levels and sales? And then how has the one quarter shortfall impacted your plans to invest in labor and service this year, if at all?

Couple of things, Steve, I'm going to talk about is GURA, and its greet, uncover, recommend and ask. Our scores are climbing in that category. I would take that if John Ordus was speaking he would tell you that there is still more work to be done, but we are seeing a comparison year-over-year in a very positive direction. The second thing I would tell you is that we're protecting payroll in our stores. We all believe, as a management team that you can't call out great service when you have no one in the store to wait on the customer and take care of their needs. And so, we are going to take the route of making sure the payroll is protected, and making sure our stores can service our customers and that could be painful at times, but we know that, that is the longer-term goal, is to keep that customer service level at an all time high. And our S&G scores, which is the company we used to measure that are very accurate today and are telling us that that is paying off. So we believe it'll payoff in sales, particularly as we get into the peak season here in second quarter. And you know what, we'll be able to update you more in July when we get through the second quarter.

Thank you.

Thank you. Our next question comes from Stephen Tanal with Goldman Sachs. Stephen Tanal - Goldman Sachs & Co.: Hey. Good afternoon, guys. Thanks for taking the question. I also wanted to ask a multipart question on the comp. I guess, part one would be sort of around the in store initiatives and whether there is any initial uplift when Neighbor's Club comes and whether the incremental self space and Pet is helping? And then part two would be sort of about, how to think about the deferred sales that you have to have from 1Q, do you think that comes in ratably throughout the quarter or is that more sort of an out of the gates types of a dynamic?

So, let me start Stephen, this is Steve, with the in-store initiatives and some of the things that we're doing. We did reset about a 1,000 stores in first quarter, in those stores they got the reset, we went up to 84-inch height. And really, the strategic area of our business in that is Pet. And you heard Kurt, and I believe, Greg both talk about the growth of our Pet business in Q1. I think we're going to get the benefit of that later in the year, because that reset happened about midway toward the back half of Q1. So, that's still in play, but we anticipate continued growth there. We tested it before we did it, so we had an ROI before we laid it out. The other thing I would tell you in store is that we had our most successful Chick Days event ever when you crossover the March/April timeframe. It was fantastic. We saw great growth in a lot of the accessories within Chick Days, whether it'd be the coops organic feed and treats. The Garden event is doing exceptionally well right now. And so, a lot of the efforts that we put into the initiatives in store have really from where I sit have paid off. The seasonal business was a drag, and it's unfortunate because it doesn't necessarily reflect the hard work nor the results that I would have expected.

Yeah, Stephen, Kurt, I'll address the second part of it. And it might be helpful as a data point to refer back to our pull forward discussion from last year. At the end our Q1, we estimated that number at about $18 million. And then, as we reported Q2 and saw the results in April more information settled we estimated at about $25 million. To have it more of a comparable number for this year, with the week shift in moving that week into Q1, but April shifting to Q2, our estimate is for this quarter, it was about a $15 million deferral into the second quarter. How that plays out in the second quarter, weather as well as Easter timing plays into it, so some of that there in the first part of April, but the rest of it really can play into just as the weather hits in various spots, particularly in the Midwest and Northeast. So I wouldn't say it's something that was immediate all in the first few weeks of April, it really plays more into the weather conditions in areas such as the North. Stephen Tanal - Goldman Sachs & Co.: Got it. And then just Neighbor's Club, is there an early lift on that or is that really more about the long-term in the data that you're collecting?

Again, this is Steve. I would tell you that and I've said this previously that if we didn't think that there was a lift, we wouldn't have rolled it out completely. We haven't gone into specifics around what that lift looks like, but we do believe there is a benefit, less in the short-run, although there is a benefit and certainly more in the long haul. Stephen Tanal - Goldman Sachs & Co.: Understood. Thank you, guys.

Our next question comes from Scott Mushkin with Wolfe Research.

Hey guys. Thanks for taking my question. So I had a short-term oriented question and then a longer one. First in, and I think you said that April is off to a good start. If you took a step back and looked at April and March combined, are you in positive territory or are you still negative, if you're going to kind of look at it that way, trying to even out some of the Easter shift in the weather?

Yes, Scott. Good question. I can't speak too specific to – specifically to those particular months. We would just say again that, we saw the March potential dissipate with the cold weather. And then I would just tell you, we've seen strong response from the consumer as the weather has turned more typical in April. At this point, that's the best I can give you. Too early in the quarter to try to give more specifics.

Because Easter should have really helped you guys out quite a bit, isn't that correct?

Well, keep in mind that Easter, we're closed on that day. So, we lose a day of sales, but certainly last year, we had the benefit of the Friday and Saturday before the Easter and we had that in April, so you do get those two days in April. And we have a strong add at that time that coincides as well. So, there is a planned expected strong sales performance in that particular time around Easter.

And were you on plan?

It's a good question. Scott, can't be any more specific.

Okay. So, then I appreciate that. And then, so looking at a longer term question, I think it's something I've asked you guys before, but I want to kind of poke at it again. I mean, if I take a step back and just look at your same-store sales, yearly same-store sales, they really have been kind of down into the right since I think 2011. Each year, they're kind of peeling off just a little bit, and some years a little more, and I guess last year. What do you guys think is causing the kind of the slow decline? And obviously this year is not off to such a good start. I mean have you kind of pinpointed on what is a major drop from like I say mid-5% to now like last year 16%, what are the causes there and why do you think it will stop?

Okay. This is Greg, I'll give a comment. I think, Steve and Kurt also say. First of all, there were tailwinds. No question, there were few tailwinds helping us. Inflation is a good thing. A few categories that had some tailwinds behind it saves and a few other things of that nature, which goes slowly kind of work their way off, okay, out of the comparable sales numbers. I don't believe – because we track this very closely with competitive intrusion, and we don't believe that it is anything that we had done to not refresh the business or bring newness to the business. I do believe, however, that the entire four wall retail businesses around the country and many segments have seen some decline. And maybe, we were part of some of that, but because I think the consumer has fallen in love with digital, which our consumer has as well. So, we have seen some shifting, as Steve mentioned earlier, we could see as much as 2% of our business this year bring down on the digital side. So there's been some shifting moving between four wall and digital, but in general I would tell you that some of those tailwinds became headwinds. And we didn't anticipate honestly the difficult business in the Texas, Oklahoma, and I'll call it the coldest regions as it's often due to the pullback in the oil markets, that was very, very difficult to overcome. Okay. That's been it (54:24)

And we do have our next question from Ben Bienvenu from Stephens Inc.

Thanks. Good evening. I'm curious, I think you had talked in the past about a labor optimization that you were going to put in place in late 2017. Is it your expectation that you will roll that out in late 2017? And if so, do you expect to roll it out via test or all at once and what kind of impact might that have from the tail of the year?

Ben, I think what we talked about is that we were going to look at labor management and payroll management as kind of a combined or task management as a combined system, and we talked about starting it – hoping to start it in the fall of this year and running it into 2018 as a completion. So, we're still on task to do that, we have not chosen the final testing yet, but we plan to do that by midyear.

Okay. Great. And then if I could just one quick follow-up on the deflation, 50 basis points in the quarter I think for the year you had previously said you expected a range of 10 basis points to 30 basis points deflation. Is that still your expectation or keeping that higher-level deflation in 1Q, has that changed at all?

Yeah. I would say that we are seeing a little bit more of deflation than our original expectations. And we still believe that we're seeing signs that it would moderate in the back half of the year. So, as we saw 50 basis points in Q1, I would say our expectation on deflation is more like a 20 basis points to 30 basis point impact for the year, with that being closer to the high end of that range in Q2 and moderating in the back half.

Great. Thanks for taking the questions.

Next question comes from Chris Horvers with JPMorgan.

Thanks. Good evening. I had two quick follow-ups, so the 2% to 3% comp in April, does that include what sounds like a small headwind from the overall Easter shift? And then can you talk about the performance of the mature store cohort relative to chain and perhaps if you've isolated it along weather impacted and non-weather impacted markets like facing North versus South?

Okay, Chris. I'll address the first question there. Yeah, Easter is a headwind in that 2% to 3%. For the quarter, that is about a 60 basis point headwind on Q2, and the lost comp sales day for the year is about a 20 basis point impact for the year.

And that 2% to 3%, that 60 basis points is like an annualized – the 2% to 3% is sort of netted at 60 basis points basically.

That's right. It assumes and includes for the quarter a 60 basis point headwind on the quarter.

Okay.

And the second question, could you repeat the second question?

So the question is, can you talk about the performance of your mature stores versus I know the West is seeing some lift out of a younger store base out there. So how are the mature stores performing, and obviously you had some in weather impacted markets and some in not. So maybe the stores in the South where there was a lot less weather impacting the overall trend, those mature stores?

Sure. Yeah. Directionally, what we're seeing is that as we've said, the less mature stores have a faster high comp sales growth than the mature stores. And then – so there is somewhat of a gap between the 5 years or less stores in the mature ones. And consistent, at least looking at Q1, the mature stores were less than the less mature stores, but they behaved similar geographically. So when it comes to mature stores in the West to mature stores in the South, they outperformed the mature stores in the North. So there's somewhat of a gap between those, but they behaved very similar. And for the quarter, the mature stores had the same typical headwinds as the less mature store due to weather.

Understood. Thanks very much.

Our next question comes from Seth Basham with Wesbush Securities.

Thanks a lot and good evening.

How are you doing, Seth?

Good. My question is around the gross margins. Just if you could provide a little more detail, maybe disaggregate the gross margin performance a bit more for this quarter between markdowns, promo and freight, and then provide some – a little bit more of color and expectations for which of these buckets will improve the most for you to achieve your guidance for over 25 basis points of improvement in gross margins down the year?

Sure. For first quarter, the product rate being the clearance, markdown as well as any promos along with freight were the most impactful factors to margin. And then I would say, after that the headwind that we saw and knew we were cycling, but the next most impactful would've been cycling the benefit we got from the discounts for inventory related to new distribution center. The other headwinds that we described were of lesser impact. Specific to go forward, Q1 did have some unique items in there. So I'd first say that, the things that were unique to the first quarter such as cycling the vendor funding related to the inventory in the DC, the clearance on the winter seasonal goods and even to some extent the additional promotions that Steve talked to were unique to first quarter. However, we do see some greater headwinds than originally expected in freight. We had said that we saw – or expected freight to be about a 10 basis point headwind in 2017. Based on what we're seeing today, that's more closer to a 20 basis point headwind and then we do have a few other areas that mix particular that if we continue to grow strong in the C.U.E. items, mix will likely be a bit of a headwind for Q2 and potential for us go forward.

Got it. So, just to understand that 25 basis points to 30 basis point gross margin improvement for the year that guidance, is that still good or do you think there might be a little bit of downside risk to that based on freight and mix?

Yeah. And I would just say, again, we're not updating guidance, but I will say as I look to Q2 that it'll be more challenges, more headwind to try to achieving that range for Q2 than our original expectations.

Understood. Thank you and good luck.

Our next question comes from Brian Nagel with Oppenheimer. Brian Nagel - Oppenheimer & Co., Inc.: Hi. Good evening. Thanks for taking my question. So, Greg, I want to go back to some of the comments you made in your prepared comments, just with regard to the headwinds and tailwinds and specifically with respect to the C.U.E. business. So, overall, is C.U.E. still – as you think about that analysis, is C.U.E. still a tailwind to the business and maybe explain why there? Then with regard to Q1, it seemed – the color you gave us, it seemed that the C.U.E. sales held up well, so I wanted to confirm that, indeed did the C.U.E. sales help volume, and I guess, the question I'd ask there is, did the promotions and all help to drive better C.U.E. sales in Q1? Thanks.

Yeah. Brian, let me answer it this way. C.U.E. business is – the things that you'll find in our store at any given time of the year that makes sense for the customer that they buy in high volume and high quantity, hydraulic fluid, wood pellets, certain products in feed and food, so on and so forth. C.U.E. units continue to increase. So we feel good about our unit increase overall in the C.U.E. categories which tells us we're still taking share. However, deflation continues to play a major role in some of those C.U.E. categories. So, I've said this before, a bag of bird seed that was at one time we considered as a C.U.E. item in the first quarter that was selling for $19 to $22, is now selling for $16, let's say it as an example, due to deflation. Those are tough comparisons to offset. I've got to see another 30%-some-odd increase in units just to be able to offset last year's comparable volume. So there is where some of that quirkiness comes into play. But, we're very, very comfortable with C.U.E., we track it very closely. Steve and the team have a pulse on it, literally daily and we continue to see share – take share. Brian Nagel - Oppenheimer & Co., Inc.: Got it. Thank you.

Our next question comes from Scot Ciccarelli with RBC Capital Markets.

Good evening, guys. I apologize, if this was asked before, because I was disconnected earlier. But I guess my question is, how should we think about the balance sheet going forward? Look I know this was a tough quarter, but we had AP'd inventory ratios fall pretty sharply. You guys are paying a dividend, you bought back a bunch of stocks, your debt levels have risen quite a bit. So I guess the question is, should we expect more debt to come on the balance sheet during the balance of the year, does that cause you potentially to pull back on your buyback program, because you don't want to add more debt? Or will the seasonal cash flow cadence that you're anticipating help reduce those cash needs? Thanks.

Sure. Scot, I'll first start with – this quarter had some unique items. Steve mentioned the earlier spring seasonal buys. And so, with our effort in January, February, addressing what looked to be potentially be an early start to spring, we pulled some receipts forward. So in regards to the balance sheet on the AP and the inventory side, it's somewhat unique to the quarter in that, the growth in the inventory is fresh spring-related items. We pulled it forward that played into the timing of our payments, and so you see that on the balance sheet. To a lesser extent, one other thing that we faced in Q1, this one, we face whenever we have a 53rd week shift, the end of the quarter ended a week later, that does impact the timing of a key payables point to our merchant and rent vendors, and so you see a little bit of that drag compared to the prior quarter as well. In regards to debt, I would just say that we look at Q1 and Q3 as those peak particular times, and you're seeing with the uniqueness a heightened level of debt, we expect in Q2 for that to go back to normal levels. We've said we're targeting and comfortable with the 2 times debt leverage ratio and other than a few particular peak times, we see ourselves at about $400 million in debt – $450 million in debt at the end of the year.

Got it. Very helpful.

And we don't expect at this point that to change any of our plan or cadence on capital allocation or dividend or share repurchase.

Understood. All right. Thanks a lot, guys.

Our next question comes from Alan Rifkin with BTIG.

Thank you very much. With respect to the gross margin, Greg, you cited that e-commerce was a headwind on the gross margin. So assuming that e-comm continues to grow at a rate greater than your stores, what kind of level can we assume will be kind of a continuous gross margin headwind from the fact that you're growing e-comm at a greater rate? And then my second question is, I appreciate the color you provided with respect to the 600 basis point delta on a market basis as a result of the weather. I was curious if you can maybe segment that a different way and tell us how much in total that the oil patch states underperformed the rest of the corporate average? Thank you.

Sure, Alan I'll take those. First in regards to the e-commerce and the gross margin, we called out the growth in e-commerce and its impact on freight. So, with our e-commerce business growing, it does have a higher freight rate and we've always had some level of burden, but e-commerce as small as it is, it's not had much of an impact, we are excited about the growth we have in the e-commerce business and we have seen a few basis points increase in the burden on the freight line within gross margin. So, we called it out. I believe that we'll see that continue in the future quarters. And as our e-commerce business grows, it could have a 1 basis points or 2 basis points impact throughout the year on the gross margin rate. And then – yeah, go ahead.

No please.

Okay.

The delta on the oil patch?

Sure, sure. In regards to the oil patch, I'd first say that the Texas region like much of the South had less of an impact on weather. So, we did not see as much volatility in sales in the Texas area, but specific to the oil patch, as Greg mentioned, we see it moderating and in the quarter we had a close to 30 basis point headwind against the – 30 basis points headwind on the comps due to the oil patch stores.

Okay. Thank you very much. I appreciate it.

Next we have Adam Sindler with Deutsche Bank.

Hi. Good afternoon, everyone. I thought if I could ask about BOPIS a little bit and then specifically to give us some examples, what types of categories or products you're seeing strong there, how this is incremental to current traffic? And then, similar to that, at the Analyst Day, I remember you speaking a little bit about potentially thinking about a subscription based program for some of the renewable C.U.E. based items, and what your sort of thought process is around that at the moment?

Yeah. Adam, this is Steve. I would tell you that, when it comes to Buy Online Pickup in Store, what we're finding is, is that our customers have an interest across the four walls. It's nothing in specific. In many cases, it's in multiples that they're buying. So it maybe fencing outside. It could be product that is on promotion for example, where they're maybe trying to reserve something, so they can get in and get the deal. But it's really across the entire spectrum of the four walls. So it's nothing that I can point to and say that 80% of what we're seeing there is one category or even a one side of the store. The second question was regarding the subscription. We talked about ONETractor and we talked about anytime, anywhere and anywhere customers want to shop a Tractor, and one of the capabilities that we're working on right now is subscription. It's one of many. And we fully anticipate making good traction on that throughout this year. And you will see us as we continue to talk with you all in these conference calls, we'll give you the traction that we're making, but it's definitely high on the list for us.

Hi. Just on the BOPIS answer just real quick if I could? So I'm unsure that in future, things that are already in the store and I imagine you generally having already high capture rate, the customers in your area, how it's actually incremental? I mean, would these people not becoming into the store to begin with to buy these things?

Sure. Well, I would tell you, it's two-prong. Yes, in some cases and I think if you would talk to most retailers, they would tell you that because I have certain retailers that I go to, that I would have gone to anyways and I use Buy Online Pickup in Store. But I would also tell you there has been several examples where we've modified our marketing budget in our spend there. And we have gone from what has been traditional over to digital, and buying SEM search words, we have found that customers are going in. I'll use the example of, the first Buy Online Pickup order that we had was actually a customer who was searching for trailers, and they never shopped at Tractor Supply before, searched the word, went on to our site, reviewed it, looked at the content, used Buy Online Pickup in Store and came in and bought two of them from us. So it's hard to pinpoint exactly who is using it, but I can tell you that we do believe it's a mix of both.

Okay. I appreciate that. Thank you so much.

Your next question comes from David Magee with SunTrust.

Yeah, hi. Good afternoon everyone. This is actually Mitch on for David. Just ex-ing out the weather impact in the first quarter, how do you feel about big ticket demand in general?

What I would say in regards to big ticket is, what we saw was the biggest headwind on the big ticket sales was the spring seasonal product. And so, I would say that big ticket demand was flat to potentially slightly positive, if you ex out the headwind that we're up against last year in the March spring seasonal. So big-ticket clearly became a stronger component of the average ticket in the month of March, as we cycled the strong spring seasonal and did not achieve those spring seasonal sales in Q1.

Okay. Thank you.

Our next question comes from Joe Feldman with Telsey Advisory Group.

Hey, guys. Yeah. Most of my questions were answered. I just want to follow-up on one other thing. Are there any new products that you guys have in the store or testing, I recall like a year ago, maybe like you tried some things with kayaks or something like outdoorsy or are there things that are maybe tangential to the business that, that maybe a way to drive additional traffic?

Yeah. Joe, this is Steve. And I would tell you, we've been talking a lot about different digital things that we're doing and ways that we're attracting new customers in our stores, but there's also an opportunity with our existing customers base to sell them new and different things like you're mentioning. And so, for example this year, we've expanded beekeeping, because we know our customers are self-reliant, and that is an unique item that really is all about sustainability, that we've expanded our organic selection both in lawn and garden, as well as in our livestock feed section, and we're seeing incredibly nice comps there. A lot of the resets we've done in adding new brands, we're expanding 4health to customers, our outdoor sporting goods for example continues to grow. We've added it to more stores at this point. We're up to between 200 stores and 300 stores. We've expanded ammo, which is another key item for us, so we think our customers are looking for it. And I'll even go as far as to tell you that we're testing live crickets and worms in a lot of these sporting goods stores as well, to see if there's an interest or a demand from our customers. So there is a lot of things going on within the four walls themselves that should continue to drive that momentum that we've talked about in the past.

That's great. Thank you for that and good luck with the quarter.

Thank you.

Thank you.

Our next question comes from Denise Chai with Bank of America.

Great. Thank you. You mentioned before that you've got tools to look at competitor pricing now, so what are some of the key learnings so far and what opportunities do you see in pricing?

Yeah, Denise, this is Steve again. I would tell you that's one of the capabilities right now that we're working on. When we talk about all the new things we're putting into and our capabilities for ONETractor. So while we have a tool out there today that is going out and web scraping for us and it's been effective for us for the most part, we've had that for now two years, I would tell you a more comprehensive tool that would give us more insight into more competitors and more SKUs will be much more beneficial as we move forward and I'll be able to give you more on that probably in the upcoming quarters.

Okay. Thanks. And then just back to big ticket for a moment. It sounds like you're – it's like, excuse me, some kind of weather and timing impacts and things. If you could put it aside it sounds like you're actually a little bit more positive towards big ticket, so in the past when there has been big ticket cycle, how long did it last?

The last part of the question is tough Denise, as it relates to weather. So, I'll let Steve maybe think about that, I want to see if he can go back in history. But I would tell you that generally big ticket is more significant in Q2 than it is in Q1 with the spring seasonal. And the only thing I did mention in the last time was the headwind of safes. And so, big ticket spring seasonal was the biggest headwind, outside of the weather, there would have been a little bit of a headwind still with the sluggishness of the safe sales.

Got it. Thanks so much.

This conclude today's question-and-answer session. At this time, I'd like to turn the call back to our speakers for closing remarks.

Okay. Thank you everyone for your continued support and interest in Tractor Supply. We look forward to speaking with you again in July regarding our second quarter results.

Once again, that does conclude today's call. We appreciate your participation.