Earnings wrap: Tractor Supply, Healthways

Ranch retailer tops estimates; wellness services provider sees better margins despite slower revenue ramp-up

Tractor Supply posted a profit of $124 million, a 16 percent increase from the same period in 2012. Per diluted share, net income was $1.75, 4 cents better than what analysts following the company had been looking for.

Sales at Brentwood-based Tractor Supply rose 13 percent to $1.46 billion during the quarter. Gross margins were essentially flat at 34.8 percent.

"We anticipated a late start to spring this year, and entered the second quarter well-positioned to take advantage of the seasonal shift," said President and CEO Greg Sandfort. "As a result, we delivered a solid increase in store traffic, strong same-store sales growth across geographic regions and double-digit EPS growth. Despite the seasonal change, our team managed the business effectively and continued to do a great job serving our customers."

Same-store sales rose 7.2 percent during the quarter — the average transaction grew by more than 2 percent — and are up more than 4 percent through the first half.

Tractor Supply shares (Ticker: TSCO) fell slightly Wednesday to $121.27. So far in 2013, they've risen more than 35 percent.

 
Executives at Healthways said the wellness programs manager posted a loss of $1.1 million during the second quarter, a reversal from the $5.1 million it earned the year before. Per diluted share, losses came in at 3 cents, 2 cents better than analysts had expected.

Revenues at Franklin-based Healthways fell 5 percent to $162 million while the company's cost of services rose slightly to $133 million. Operating income fell to $1.5 million from more than $13 million in Q2 2012, although operating margins improved from Q1. The bottom-line expectations beat came despite slower-than-expected revenue growth from some large new and expanded contracts, but CEO Ben Leedle said his team continues to expect Healthways to return to profitability in the third quarter and further improve its margins in 2014.

Leedle also announced that Healthways has signed a strategic partnership with the nonprofit Beacon Health System in north Indiana and southwest Michigan. The two entities plan to draw up population health management strategies for Beacon's footprint.

Shares of Healthways (Ticker: HWAY) rose more than 1 percent Wednesday to $17.01. Year to date, they're up almost 60 percent.