Good afternoon, ladies and gentlemen, and welcome to Tractor Supply Company's Conference Call to discuss the First Quarter 2018 Results. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of the Tractor Supply Company. And as a reminder, this call is being recorded. I would now like to introduce your host for today's call, Mrs. Mary Winn Pilkington, Vice President of Investor Relations and Public Relations for Tractor Supply Company. Mary Winn, please go ahead.

Thank you, operator, and good morning, everyone. On the call today are Greg Sandfort, our CEO; Steve Barbarick, our President and Chief Merchandising Officer; and Kurt Barton, our CFO. Before we begin, let me reference the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. This call may contain certain forward-looking statements that are subject to significant risk and uncertainties, including the future operating and financial performance of the company. In many cases, these risk and uncertainties are beyond our control. Although the company believes the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct, and actual results may differ materially from expectations. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included at the end of the press release issued today and in the company's filings with the Securities and Exchange Commission. The information contained in this call is accurate only as of the date discussed. Investors should not assume that statements will remain operative at a later time. Tractor Supply undertakes no obligation to update any information discussed in this call. After our prepared remarks, we will open the call up for your questions. Please limit your questions to one and one related follow-up question, if necessary. Our goal is to keep the call to an hour. I appreciate your cooperation. I'll be available after the call for follow-up as well. Now it's my pleasure to turn the call over to Greg.

Thank you, Mary Winn, and good morning to everyone joining us on the call today. I'll start today's call by providing a review of the operational and financial highlights for the first quarter of 2018 and a few comments regarding our ONETractor strategy initiative. Steve will take you through several of the merchandising and marketing highlights, and Kurt will provide additional detail regarding our financial results and our financial outlook for the year. And then following that, we will open the call for questions. As I've stated already, we are very pleased with how the team managed through the first quarter, and we successfully controlled those elements that were in our control. Our results were driven by a broad-based strength across all geographic regions as well as increases in both comparable store transactions and average ticket. And all four merchandising divisions achieved positive comp sales in the quarter. Our first quarter results represent the third consecutive quarter of comp store sales running above a 3% comp. In addition, we achieved these sales results despite less than ideal conditions over the course of the first quarter given the late arrival of the spring season across many of our markets. As we have consistently shared with you over the years, we believe that our business should be viewed across the halves, not the individual quarters given the impact seasonality can have on where our sales will develop by quarter. Although we have continued to experience unseasonably cool weather in many of our markets thus far in April, I am pleased with our merchandise sales and current traffic trends in markets where we have experienced warmer spring like conditions. With a strong in-stock position and a strong product assortment, I am confident we are well-positioned to capitalize on the spring/summer selling season still…

Thanks, Greg, and good morning, everyone. I just wanted to take a moment this morning to give a brief update on product performance and progress that we're making on our merchandising initiatives through the first quarter. As Greg mentioned, during the quarter, we had a solid comp store sales performance, driven by both increases in traffic as well as average ticket. We experienced positive comp store sales across all four walls of the store. We continue to experience strong sales in our C.U.E, consumable, usable, and edible products. And during the quarter, we had strong sales dollars and unit growth across categories such as pet food and treats, livestock feed and forage, as well as bird feeding and small animal products. These are stable categories that our customers depend on us for and drive repeat traffic to our stores. This quarter's performance reflects the commitment to being the most dependable supplier of basic maintenance needs for those customers that live the Out Here lifestyle. In addition to the strength of our C.U.E. business, colder than normal temperatures during the quarter also drove demand for winter seasonal merchandise. We experienced strong sales in categories such as livestock equipment, portable heating, long-sleeve apparel and footwear, along with snow removal products. However, toward the end of the quarter, we did experience a delay in our spring businesses. Departments such as power equipment, lawn and garden, as well as ag-related categories underperformed compared to company sales. We did see early signs of positive spring-like sales in the southern part of the country, but that was offset by colder temperatures in the north. Our in-stock position is in great shape and we're prepared to capture these sales when the temperatures normalize. Turning to merchandising initiatives, we're pleased with the new programs we added for the…

Thank you, Steve, and good morning, everyone. For the first quarter of 2018, we had solid comp store sales growth of 3.7% which was driven by a 3.2% increase in comp transaction count and a 0.5% increase in our average ticket. For the quarter, we benefited from an additional selling day as we were open on New Year's Day for the first time. We estimate this incremental selling day added about 60 basis points to our comp performance in the quarter. January and March were the strongest months of the quarter, with January being the highest comp overall. Petsense comp store sales increase was close to our chain average. For the first quarter, gross margin increased 36 basis points to 33.5%. The increase in gross margin was primarily driven by strong sell-through of winter seasonal categories partially offset by an increase in transportation cost from higher carrier rates and diesel fuel costs. Including depreciation and amortization, SG&A as a percentage of net sales increased by 89 basis points to 27.9%. The increase was primarily attributable to investment in wages for our team members at both the stores and distribution centers, higher store-level cost due to increased utilities and maintenance expenses from the extended colder temperatures, and investments in infrastructure to support our strategic long-term growth initiatives. We estimate that about 25 basis points of this increase is specific to factors in the first quarter that are not anticipated to reoccur in the balance of the year. Our effective tax rate decreased to 20.9% in the first quarter. The decrease was driven by the U.S. Tax Cuts and Jobs Act that was signed into law in December 2017 and the realization of some discrete federal and state tax credits which we estimate reduced our first quarter effective income tax rate by…

Thank you, Kurt. And what I'd like to say is thank you, and I'd like to reinforce how appreciative I am of our entire team's efforts during the first quarter of 2018. Our more than 28,000 team members bring our mission and values to life every day as they serve our Out Here lifestyle customers. We have a wonderful business which addresses a unique niche operated by exceptional team members, and I am proud to be on their team. With that, Mary Winn, we would now like to open the lines for questions.

All right. Alex, we can open up for questions, please.

Thank you. And we will take our first question from Michael Lasser of UBS. Please go ahead.

Greg, good morning. Thanks a lot for taking my question.

Hey, Michael. How are you?

Good morning, good. You guys outlined a lot of initiatives that contributed to your very good traffic performance in the first quarter, but you were also doing a lot last year. So how should we think about what drove the very strong improvement in traffic that was the best we've seen in some time and how sustainable is the traffic growth that you saw in the first quarter moving forward?

Michael, I'll take that one and Steve may deal with the follow-on. We talk about being the most dependable supplier, and in the first quarter we clearly saw an extension of the winter selling season. So being nimble with our supply chain we were able to, I'll call it this, reload and address many of those needs as they move through that quarter. And those footsteps are generated by people who need what we sell, so having that inventory available and being able to react appropriately I think is what drove the footsteps. The C.U.E. business continued to perform well. When you've got that type of weather, you're going to see your food and feed businesses accelerate as well as forage. So I would tell you being in-stock, being there for our customer is probably what, I would say, drove the footsteps. Steve, you must have something you want to add?

I have nothing to add. I think that was a good assessment of the quarter. (25:13)

Yeah, it's sustainable so that's the right way to think about traffic for the rest of the year?

I think we would say yes because our plans are, as you saw, we were about 1% up in inventory in total which would relatively mean flat. But it's the investment in the right inventory that we've done I think a remarkable job with over the years. We run a tight ship, albeit an awesome one, one's that's very directed to the needs of the customer and by the regions of the country. So I don't anticipate any slowdown, I really don't.

The one thing I would add there, Michael, is well Q1, the weather was helpful. We've had got a good run of traffic in our stores. And as Greg mentioned, I think 39 out of 40 quarters. I will tell you we continue to pick up share in a lot of these C.U.E. businesses as Greg mentioned, and the team's focus around those C.U.E. businesses is really paying dividends. As Greg mentioned, our in-stock positions are better, we continue to build out our assortments, and we're making sure that we're priced right to get that traffic in and have those folks really become loyalists. So I would anticipate, when you look at the core business, for the strength of that to continue.

And my quick follow-up question is Kurt mentioned that March was a strong month, and I think the expectation was given the weather that moved through the middle and eastern portion of the country, that it was going to be a drag on the business. So where there just regions that offset that or was it not as much of an impediment as was expected?

Yeah. Michael, this is Kurt. As we look at the quarter, as Greg mentioned the strength of our quarter, we capitalized on the colder weather seasons even into the month of March but also we're able to see strength in the month of March on our core everyday products. So the way we assess March is that we were able to see some strength in the cold weather product along with the core side of the business that was able to somewhat offset the softness in a delayed spring season.

Thank you so much.

We will take our next question from Seth Sigman of Credit Suisse. Please go ahead. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Thanks very much and good morning. My first question is around the online growth. I'm just wondering – I may have missed this, but can you guys talk about the online growth? I don't know if you quantified that. Maybe just the total growth and what it's contributing to the comps. And in general, it's good to see that it's tied to the store. Any more color around the types of categories that you're seeing growing and what is actually driving that? How much of it is driven by the need, the immediacy? How much of it is big ticket items, things like that? Thank you.

Yeah. Seth, this is Steve Barbarick. What I would tell you is that in 2018 we anticipate the online business to do somewhere between 2% and 3% of our total sales, and it is growing, as Greg mentioned, 23 straight quarters of double-digit comps. And you got to look at it from a couple different perspectives. The first I would tell you is Greg mentioned the importance of the store, and I just want to reiterate that. About half of our online business today is Buy Online, Pickup in Store. And that portion of our business is in some of the core businesses that we have, and you'll see that in fencing and a variety of categories where customers are looking for convenience. In many cases, a lot of our customers have folks that work with them that can go in now and pick up the product since the purchase has already been made, and there's a tremendous benefit to a lot of that when we're out traveling stores and talking to our team members. I think that business will continue to grow because it is convenience. The next element is ship to store, and many of the ship to store products are products that we don't carry within the four walls of the store today. So they're really incremental sales that customers are purchasing, coming into the store and buying. And then the last element is the product that is actually shipped to customer or shipped to home, house, however you want to look at it. And that business, again, has probably a good mix of both new products that our customers are looking for that the box may not have as well as some products that are inside the four walls, but they just want it delivered for them from a convenience perspective. The categories that we're seeing grow vary across all categories within the box itself. There's not any one specific category. I will mention one last thing here and that is as we did, as I mentioned, initiate our subscription program, it is a relatively small part of the overall portfolio of what we're selling today online, but we're learning a lot of really interesting things about what our customers want. And a lot of those things are brands like 4health. I mean, we're seeing a pretty high concentration and penetration of sales there as well as some of the branded products. So again, it kind of all goes back to this one integrated experience and really the value ONETractor brings, that whole strategy. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Okay, Steve. Thanks so much for that color, really appreciate it. One follow-up for Kurt, the discrete SG&A items from the first quarter, I'm just wondering was that factored into your original guidance, the EPS guidance for the full year?

Yeah, Seth, that's a good question. On the 25 basis points, I would say part of it is and part is not. There's really three factors in that. The most significant part is what I mentioned in that the colder weather brought higher store occupancy costs specific to utility, other maintenance-related type items. And that necessarily was – with colder temperatures than expected, it wasn't in the factors. The other half of that is in a couple other areas we had some specific costs, corporate leave, related to employee benefits, specifically to medical, that were in the long-term, part of our overall cost structure for 2018, but specific to the first quarter. As well as we ramped up our West and East Coast transport centers and staged spring import seasonal products to allow us to be ready to distribute quickly to the right forward locations, having that ramped up in lieu (31:52) gave a little bit of additional cost specific to the pre-spring seasonal that, again, discrete to Q1. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Great. Thank you for all the color. Appreciate it.

Yes.

We'll take our next question from Steve Forbes of Guggenheim Securities. Please go ahead.

Good morning.

Good morning, Steve.

You briefly mentioned in the prepared remarks two programs, right, Neighbor's Club and Buy Online, right? But now that we cycled Neighbor's Club, the national rollout, and we're about to cycle BOPIS, can you just provide additional commentary on how these programs are maturing relative to your expectations? And maybe comment on how you expect them to impact trends, right, with the arrival of spring as it relates to both ticket and traffic, right? Because I think part of the goal here was to reaccelerate ticket. So any color there would be appreciated.

Yeah, great. This is Steve. Let me take that one. First off, I've already talked a little bit about the Buy Online, Pickup in Store program. We'll continue to communicate that message to our customers because we think that there's great value in that. And over time, I think that that will continue to grow as more and more people gravitate toward it. Our operations team has done a fantastic job making sure that we're taking care of our customer. And that, like as I said, will continue to expand. In terms of Neighbor's Club, there's more color probably here I can give you. It has anniversaried now. We have hired a VP of CRM and we're building out the analytics team today. And we're really digging down into the information. And it's given us a better sense of who and what our customers are looking for from us because now we're able to capture the whole 360 of that customer. And even in Q1 itself, we were able to alter some of the e-mail communication going out to these customers because we've got all these new e-mail addresses talking longer about the weather up north where we could support, and that helped us during Q1 drive some of those cold weather sales. And at the same time, while it was getting warm down south, we were able to geo-target some of those customers and get out in front of that as well. So that's going to do nothing but add longer-term value. Looking at segmentation, being able to communicate to you all in the future on frequency of shop, on spend by customer now that we've anniversaried this, is all into the future. And I will tell you that the enrollment of our Neighbor's Club program is giving us confidence that in the long haul, we'll be able to use this as a real sales driver and loyalty tool for the future.

Thank you, and then just a quick follow-up. I know we talked about this at the Analyst Day briefly, but can you expand on I guess some more recent thoughts of the downstream capabilities or initiatives of the DC network, right? Obviously, BOPIS is resonating, but how do you think about the choices you're going to provide to customer as it relates to home delivery? You mentioned the subscription test, but really what are you thinking about the evolution of your value prop as it relates to that?

Yeah, this is Steve again. I would tell you that we're actually very proactive in this front. Kurt mentioned a few things. I will tell you that as we look forward, we are working on three or four different tests on delivery today. And delivery from store is still something that we're working toward in testing. So as customers continue to tell us what they're looking for from us as we move forward with many of these initiatives, we will continue to evolve with the needs of those customers. And I think we're really well-positioned with 1,700 stores across the United States to be able to accommodate their needs. And using our stores really as a central hub, not just for them to come in but for us to ship from, is going to be a real differentiator for us into the future.

Thank you.

We'll take our next question from Matt Fassler of Goldman Sachs. Please go ahead. Matthew J. Fassler - Goldman Sachs & Co. LLC: Thanks so much and good morning, guys.

Good morning. Matthew J. Fassler - Goldman Sachs & Co. LLC: My first question just relates to the cadence of sales during the quarter. You commented on January and March and the fact that March was a good month. If you think about the net impact of the weather based on the quarter and of March as well, I understand that winter products are better; spring products obviously worse. How did weather net out do you think versus your expectations for the quarter and, in particular, for the month of March? How would you say that netted out relative to expectations?

Yeah, let me go ahead and start with that, Matt. What I would tell you is when we got through the first four weeks of the year, we were feeling pretty good about the way that the sales cycle looked. And figuring what we had already put behind us and with a normal spring, I think we probably would have actually exceeded the comp sales that we had for Q1. If you look at March specifically, Tractor Supply has done a really nice job building out a cold weather business up north. And as that business kind of stayed up there, I will tell you that I can't say that we traded sales between spring and north equally. I think we gave up some opportunity quite frankly on the upside when it came to the spring season from the northern part of the country. But we were able to get some benefit from keeping and being nimble on a lot of the cold weather products and working with our vendors to make sure – we were spoon-feeding those stores up north to capture every possible sale that we could. At the same time, if you look at the southern part of the country, March didn't play all that bad. We were able to get some benefit from a lot of the southern parts of the U.S. Unfortunately, it just wasn't enough to offset the lack of spring that we had up north. Now as we look forward, what I can tell you is as we've been through plenty of cycles here at Tractor Supply Company, weather is a factor when you support a customer that lives Out Here, and we anticipate that the grass will grow up north and it will get warmer, and we're prepared to capture those sales.…

Yeah. Matt, this is Kurt. I would say it's so early in the season, and the impact like Steve said on Q2, it's really hard to predict that. I'll go back to what we've said when you look at the halves that we anticipate that the first half will have a higher comp than the second half. We anticipate that the first half, the best we see it today, will be at/or potentially above the annual range of a 2% to 3% comp for 2018. So we believe that when the spring season hits, it accelerates pretty fast with the warm weather. And so to Steve's point, whether that hits in what particular period or does it spillover, that's yet to be seen. A lot of the season ahead of us. As we predict out, and you look at Q1's performance, it still could end up being the strongest comp performance for the year. But as you look at Q2 and Q3, that still blends out to a comp in the first half of the year as to what we guided. Matthew J. Fassler - Goldman Sachs & Co. LLC: Thank you.

We will take our next question from Matt McClintock of Barclays. Please go ahead.

Hi, yes. Good morning, everyone.

Good morning.

I was wondering what you'd focus on looking forward. Steve, can you talk a little bit about what you're most excited about from a merchandising standpoint this year in terms of your initiatives and thinking about that acceleration that Kurt just talked about? And then could you tie that in a little bit to big ticket and how we should think about improvement and/or acceleration in that specific part of your business going forward? Thank you.

Sure. I always like getting a question about what am I getting excited about because I get excited about a lot of things. One of the things I would tell you is, having been with the organization as long as I have, there's probably as much energy and enthusiasm that I've seen quite frankly in a long window of time just because there are so many exciting things going on. In terms of product, I would tell you, and I mentioned earlier, the Husqvarna brand continues to exceed our expectations. And we're not giving up on branded products whatsoever. There's a variety of things we're doing within the box along with some Scotts product and a few other categories and tools that I think are really going to help move our business forward. In addition to that, we're making good strides in a lot of our exclusive brands and private brands. And whether it's the launch of these, whether it's getting behind them with more social media, we're really seeing these brands resonate with our customers and that's driving some loyalty. The last comment I would make on product is even the inside of our stores. So many of you maybe know that we've got this ONETractor concept store. So far we've got, I guess, now we're up to four stores that have opened; three new, one retrofit. All of them are exceeding their original forecast in terms of sales. As we move forward, we're going to be adding probably 40, 50 of our new stores into this concept as well as retrofitting a number of stores because we think it's adding value to the box, our customers, and our own operational efficiencies. That's really on the product side. The only last thing I'll share with you is I wouldn't minimize the benefit we're going to get from customer engagement. There's a lot of activity taking place there, and I think us being able to reach out to our consumers through e-mail and building that out is really critical to the future of our organization. And the last thing, and Greg said it very well, is really all the energy we've got around our ONETractor initiatives and what we're doing with online and fusing the box along with the digital side of our business so that we're really this whole idea of ONETractor and the ONETractor brand. Specifically to ticket, we've got a variety of things that we brought into the stores that are at a little higher price points, and we still see opportunity there. We're working on a financing program that's a little more competitive than what we maybe have seen in the past that we think will add value. But we really won't know the value of that financing program until we get a little further into the season and see how it resonates with our customers with a lot of the OPE lines that we have. But it's something that we're working on.

Thank you for that color.

We will take our next question from Simeon Gutman of Morgan Stanley. Please go ahead. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Thanks. Good morning. I want to follow-up something Matt asked and Steve commented on regarding the weather. You've gone through a lot of cycles and you've seen a lot of patterns. In this case, we have witnessed a late April and I think spring still hasn't arrived. So in those instances, I wanted to talk about pent-up demand. I realized it's pretty fluid but how do you think about like riding mowers for example? Would we not just sell the same number or that's still very possible depending on the extent of the season?

Yeah. Let me start with that one, and we get that question, it's a great question to have. A couple thoughts. First off, we do have stores in 49 states which benefits us as an organization, so we're not geographically confined to just the northern tier of the country. If we were, I would tell you that I would certainly be even more anxious. I do believe that when it comes to mowers in spring, it's a little different than in the colder season, and I say that because you can delay buying jackets an insulated if you get close to the end of the season. But if you break your lawnmower, you need a lawnmower. And so for us knowing that there's still this window in front of us, we believe we're going to capture the vast majority of what the needs of our customers are going to be. The key for Tractor is making sure that we're nimble enough to have the inventory there when we get the rush of customers that all come in within the short window of time potentially. That's the key. And so our supply chain is working right now. You heard Kurt talk about the investments in these transload centers. And our DC network is prepared to start pushing that trigger on an as-needed basis as the weather continues to get warmer and warmer. So I think we're really in a good solid position. We just got to make sure that it's incumbent upon us now to capture the demand that comes in based on our levels of inventory. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Okay. And then my related follow-up is if you're seeing any infection in big ticket from the TSC credit card offer or weather is just the bigger gatekeeper on ticket and then we'll see stronger growth as the season plays out?

Simeon, this is Kurt. As Steve mentioned when he address the financing earlier, I would say it's very early in our season. But in regards to watching where we've started, you may have seen in our stores the additional deferred financing programs, the emphasis on low monthly payments that resonates with our customer. I would tell you while very early we are pleased with the upside that we see, and we believe it's a key part to combining and be able to partner with the merchandising, new assortments, bigger ticket items, and the ability to sell with it. We will have more information at the end of Q2 where we're able to talk more about the benefit from the new financing programs. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Okay. Thanks, Kurt.

We will take our next question from Peter Keith of Piper Jaffray. Please go ahead. Peter Jacob Keith - Piper Jaffray & Co.: Hi. Thanks. Good morning, guys, and nice job navigating a tough weather environment.

Thank you, Peter. Peter Jacob Keith - Piper Jaffray & Co.: Now with the drum beat of inflation picking up in particularly with some of the areas like steel and oil that you guys sell, could you give us an update on how you're navigating this environment and maybe if you're raising price or maintaining price? And on a related note, Kurt, if you could give us any inflation or deflation impact to comps for the quarter as well?

Sure. I'll start with that and then I'll let Steve follow on that. In regards to what we see, for first quarter we've seen now a net modest benefit from inflation during the first quarter and we continue to take a strong look at and we monitor those key input items, the corn, the petroleum, and the steel side of it, and those items can vary a bit. I would say that some of the inflation in the first quarter that we saw came from areas specific to heating. So that may be discrete to a Q1 but we're anticipating that we'll continue to see some net modest inflation throughout the rest of the year.

And Peter, the only thing I would add is, first off, I'm going (48:29) on talking about deflation; it seems like we're talking about deflation for years. One of the benefits we have are the pricing tools we've talked about. The investments we've made in a lot of these pricing tools have given us a better insight into the elasticity of the product. Where we can move ahead retails as prices come toward us, we do. But we're watching it very, very closely with all the tools that we've got. Peter Jacob Keith - Piper Jaffray & Co.: Okay. Thank you very much, guys. And then a follow-up. Kurt, in the prepared remarks you mentioned that you expect certain regions could see a longer spring selling season. I guess could you give us a little more detail around that or what are you seeing that gives you that type of conference? And are you talking about summer season extending as far as into Q3 and maybe seeing some benefits as we look out beyond Q2?

Sure, yeah. It's the latter that you referred to. What I would say is it's not as much of what we've seen today as much as historically as we've seen this. As there's colder weather there's also, in the last few months, higher moisture – February, March, and even April. And historically, as we've seen that, that bodes well for the spring selling season when that warm weather comes, but also allowing us in certain geographic markets to have that prolonged season, and Steve spoke to that in regards to the north and other areas. So we look at it and say there is the potential for that as you're trying to assess where these spring sales may occur throughout the cadence of the year. Peter Jacob Keith - Piper Jaffray & Co.: All right, sounds great. Keep up the good work.

Thank you.

We will take our next question from Elizabeth Suzuki of Bank of America. Please go ahead.

Great. Good morning. Can you estimate what percentage of your sales are in product categories that your customer really can't get anywhere else or at least not at any of the major big box retailers, like you can't find live chicks at Walmart, as far as I know. So how much of your traffic or how much of what you sell is in those unique Tractor Supply products compared to more competitive product categories?

Liz, this is Steve. And I'm not sure that we've necessarily broken it out and defined it exactly that way. And the reason I say that is that even in for 4health, we've got a strong following, but it's pet food, right? And so if you're in the business and you just need pet food, you can buy pet food, but we see the value of that product. So we know a third of our business is in private-branded product. In addition to that, we do carry brands that are somewhat unique to our channel as well as to Tractor Supply, and I'll use the example of things like Bad Boy Mowers. Even MTD, to a certain extent, is more dealer-based, but they work with Tractor and not a lot of the farm and ranch chains; the Purina Checkerboard. So I'd almost need to go through and really work hard to try to come up with a real good specific answer for you. Where we focus most is on differentiation. So I'll use one last example and leave you with that, and that is 5-gallon buckets of lubricants are much more important to us than consumer passenger motor oil. And that's where our focus traditionally has been and that's what differentiates us from many of the big boxes or even the pet specialty chains is where we think we can win. So that's the best I can do to try to quantify.

Okay, great. And you talked about your pricing tools. How many of the stores are using digital price tags now that you can update instantaneously? And is there a plan to use that more broadly so that you can be more nimble as input pricing changes?

Great question. We're today using the digital pricing tools in just a handful of categories and just a few stores. And really, it's to get a read on it, how it works operationally for Tractor Supply Company. Do I see a mass rollout of this anytime soon? Probably not. But we're a test and learn company. And as we get more findings and understanding of how that operates, we'll move forward with it. We feel like we're in a pretty good position the way we're managing it today. We can be pretty nimble the way we operate, but it is something that's being tested.

Great. Thank you.

We will take our next question from Christopher Horvers of JPMorgan. Please go ahead.

Thanks. Good morning.

Good morning.

Good morning.

I think one of the big questions out there is the margin outlook beyond 2018. If you back out the tax impact, earnings were roughly flat year-over-year, and the way that the year has shaped from a guidance and consensus perspective is that the sort of EBIT declines deteriorate throughout the year. So what drives the inflection around operating profit rate as you transition past 2018?

Yeah, Chris. This is Kurt. I would start by saying this. As we look at first quarter and even outlook into the next couple quarters, I mean, we're executing the plan that we laid out and it's consistent with our expectations. The cost pressures are relatively in line with our expectations. And we said that 2018, we'd be facing transportation cost new levels. We'd be investing in our wages and our labor of our team members as well as ONETractor. So the key answer to your question is two things. One, those are a step up in the investments in 2018 that we'll cycle and leverage in 2019 and beyond. And these investments in ONETractor, a number of the things we've just talked about, are starting to take hold. And you combine the plateauing of that, of the cost pressures with the tailwinds and benefit from our investments, is where we believe the operating profit margins begin to rebound back beyond 2018.

Understood. Then, as a follow-up, can you talk about how Texas and the energy markets and ag markets performed? If you go back couple years ago, that was a drag on the business. Are those markets now outperforming the total comp? And how would you describe just how that's changed because I think last quarter perhaps Texas and energy was more in line with the company average.

Chris, I'll start on that. This is Kurt. And I would say with the Texas market, I will say that in general for the first quarter, they had more normalized weather than some of the other parts of it. So the performance in the Texas-Oklahoma area, southwest, was strong for the first quarter. And I would say a part of that is we're starting to see a transition from that being a headwind to neutralize to actually a bit of a start of a tailwind, nothing of a robust nature that we saw a handful of years ago. And in the ag and farm economy areas, most of that is in the Midwest area. And at this point, the weather is a bigger factor than anything. And when you look at Q1, hard to say whether or not the ag economy had any impact and it's more of a weather factor at this point. And last thing I'd say is what we've said. Our customer is not the production ag customer and ag farm economy does not have a strong correlation necessarily to our comp performance. Weather has a greater impact to it in that industry.

Thanks, guys. Good luck for the rest of spring.

Thanks.

Thank you.

We will take our next question from Scott Mushkin of Wolfe Research. Please go ahead.

Hey, guys. Thanks for fitting me in. So Greg, I noticed in your monologue that you did a great job outlining the ONETractor initiatives, and we fully support what you guys are doing there and I think you have a large opportunity I think as you outlined. Maybe the one missing ingredient for us is when we go through the proxy and we look at how the incentives are for management, there's no ROIC in their at all, and ROIC has always been the number one indicator of future equity performance over one really multi-year period. I guess I was just a little surprised because it doesn't seem – ONETractor does seem like a kind of longer-term kind of framework but it doesn't seem like management's incentivized to look at ROIC. I was wondering if you could have a comment on that.

Well Scott, there's multiple ways to look at ROIC from a standpoint how it incorporates into either a direct correlation or an indirect correlation to compensation. We have always looked at it as a component of, not a singular component to itself. And we have a very robust, as you know, process for allocation of capital. It's been very time-tested and it's been productive. But when you look at the overall performance of any company, if you look at one or two individual measures, I think you start to look at the short side of what literally drives the company. And when we look at our measurements behind our compensation program, they are designed for performance. You have to perform to pay. And so yes, ROIC is an element. It's discussed. It isn't a singular item that we look at but it is part of the conversation that we have every year. And net income to me is one of the better factors to look at because I can start to manipulate, if I was one of the members of management, certain elements; ROIC could be one, there could be others. I like to look at the combination of the entire package and say listen, at the bottom line net income of the company is what the shareholders also are interested in. And we believe the package, the way it's structured, delivers the right results. It's been time-tested and I don't see any reason to change at this point. Kurt, you want to have any comment? (59:33)

The only thing, as an example, what you don't see in the proxy is the emphasis we have on ROIC. And we've mentioned a couple times, even at the Analyst Day, our operational efficiency and productivity initiatives, and ROIC is a core part of that because management looks at and is accountable to key factors and measurements that build up to, and we focus on ROIC. So I just want to use that as an example to emphasize ROIC is part of one of our top few driving metrics for performance within Tractor Supply.

Okay. Great.

All right. Okay, Scott, go ahead. I'm sorry.

No, no, Mary Winn. That's fine. I can follow-up offline. Appreciate you guys squeezing me in.

Sure thing. Operator, I know we've gone just a minute past the top of the hour, so I think we'll end the call there. I think Greg, you want to wrap up the call?

Yeah. Let me just say that I want to reiterate that the business model here at Tractor Supply is solid, and we're excited about the growth prospects not only for this year but for years to come. As we have shared with you, we do have a solid plan and we have the ability to become flexible and nimble with how the business can develop over the year based upon our position of strength and how we believe we can take more market share as we focus on creating longer-term shareholder value for the company and for our shareholders. So with that, if you have any other further questions Mary Winn will be available afterwards. We thank you for your interest in Tractor Supply and we look forward to talking to all of you very soon.

All right. Operator, that will now conclude our call.