For public companies in Williamson County, federal tax cuts helped


For public companies in Williamson County, federal tax cuts helped

By MATT BLOIS

In the third quarter of 2018, some public companies in Williamson County felt a boost from the Tax Cuts and Jobs Act passed by Congress last year.

That has helped companies, such as Tractor Supply Company and Delek Industries achieve strong financial results so far this year.

The Home Page spoke with Robert Collins, a managing partner at Wealth Management Group of Tennessee, to review the third-quarter performance of several public companies in Williamson County.

Business Williamson previously reported on public healthcare companies. Here’s a summary of how some non-health care companies fared.

Delek

The petroleum refining and logistics company Delek U.S. Holdings had a profitable third quarter in 2018.

The company had a net income of $179.8 million — $2.03 per diluted share — versus an income of $104.4 million — $1.29 per diluted share — in the third quarter of 2017. Delek attributes the improvement mainly to better performance in oil refining.

Earlier this year, Delek announced that it would be part of a group of companies building a large oil pipeline from the Permian Basin in Texas to the Gulf Coast.

The company also plans to invest more than $200 million into a collection system in the same area over the next several years. Delek says the collection system will give customers better access to its oil.

In a press release in September, Delek announced that it planned to buy back $100 million of its own stock in the third quarter of 2018. When it announced the the financial results from the third quarter, the company announced a plan to buy back $150 million in stock in the fourth quarter.

Collins said the company seemed to be in a good position moving forward, and saw the stock repurchases as a good sign.

“While stock buybacks are not always a good sign, it is usually a sign of strength,” he said. “If a company has the money on hand to buy back stock and shrink the number of shares on the public market that’s usually considered a good thing.”

Tractor Supply Company

The third quarter report for Tractor Supply Company credited the Tax Cuts and Jobs Act for helping boost profits.

The company reported $116.8 million in net income, an increase of about 27 percent over the same period last year.

Tractor Supply said the Tax Cuts and Jobs Act reduced the company’s tax burden from 36.4 percent in the third quarter of 2017 to 21.5 percent in the third quarter of 2018.

During a conference call, the company also reported double-digit growth in e-commerce. Most of the online sales were picked up in stores. The company opened 23 new stores in the third quarter.

“For Tractor Supply, the macro headwinds we’ve experienced over the last several years have abated and the team is now in a position to capitalize on the current consumer trends,” CEO Greg Sanford said during a conference call.

COO Steve Barbarick said the company is monitoring the potential impact of tariffs, but doesn’t expect they will have huge effect on the bottom line.

“Keep in mind we have a large segment of our business such as our consumable, useable and edible products that are impacted very little to none at all,” he said during a conference call. “Depending on the product category, the team is working through our plans to mitigate the potential impact of tariffs.”

Tractor Supply has repurchased 4.3 million of its own shares in 2018 for about $289.2 million and paid $109.2 million in dividends. The company also increased labor wages and invested in new technology, which contributed to an increase in general administrative expenses. 

The company raised their financial predictions for the rest of the year. Collins said that’s a sign that the company is firing on all cylinders.

“I think what you’re seeing is a team that’s actually executing on their vision,” he said. “That’s what any company wants.”

Nissan North America

Reports of financial misconduct by Nissan’s Chairman and Representative Director Carlos Ghosn have focused attention on Nissan over the past few weeks.

An internal investigation found that Ghosn and Representative Director Greg Kelly had been underreporting their compensation for many years. The investigation also found that Ghosn had been using the company’s assets for himself.

The company, which has its North American Headquarters in Williamson County, revealed the misconduct on November 19.

About two weeks earlier, the company released financial results for July through September 2018.

Global net income fell from 141.6 billion yen to 130.4 billion yen, about a seven percent decrease.   

Between April and September, Nissan’s retail volume in the U.S. fell from 779,000 cars to 709,000 cars compared with the same period last year, a decrease of about nine percent. Sales also fell in Mexico.

However, sales increased by about 1.8 percent in Canada, and the company’s market share in that country increased by about 7 percent.

In a press release, Nissan said the decrease in sales was due largely to a planned decrease in wholesale volume to reduce inventory at dealerships. The company expects that reducing inventory at dealerships will improve the quality of sales.

North America makes up the largest portion of Nissan’s global sales, however China is quickly catching up. While the number of cars sold in North American fell, the number of cars sold in China between April and September increased by about 10 percent.

The company sold more cars in China between April and September than it did in the U.S. That wasn’t the case during the same period last year.

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