SOUTH SAN FRANCISCO, CA--(Marketwire - May 12, 2008) - Core-Mark Holding Company, Inc.
(
NASDAQ:
CORE), one of the leading broad-line distributors in North
America, announced financial results for the first quarter ended March 31,
2008.
First Quarter
Net sales were $1.35 billion for the first quarter of 2008 compared to
$1.28 billion for the same period in 2007, a 5.4% increase. The increase
in sales was accomplished despite a 1.4% decline in cigarette carton sales.
Non-cigarette sales grew 11.0% in the first quarter of 2008 compared to the
last year's first quarter.
Gross profit for the first quarter of 2008 was $81.2 million compared to
$75.5 million in the first quarter of last year. The first quarter of 2007
included an additional $3.2 million in cigarette holding profits compared
to the same period this year. Gross profit, excluding both cigarette
holding profits and LIFO expense, grew from $74.0 million in the first
quarter of 2007 to $82.8 million, an 11.9% increase. This improvement was
driven by our non-cigarette categories due primarily to candy price
increases and our marketing initiatives.
The Company's operating expenses for the first quarter of 2008 increased to
$80.5 million from $71.7 million in the first quarter of 2007. A portion
of this was due to an increase in employee benefit costs, related primarily
to healthcare claims. Also included in this increase are start up costs of
$0.7 million and operating expenses related to our new Toronto division.
The first quarter of 2008 resulted in a net loss of $0.5 million or $0.05
per diluted share, compared to net income of $2.1 million, or $0.19 per
diluted share for the same period in 2007. In addition to the items
mentioned above, the decrease in net income also includes a pre-tax foreign
exchange loss of $1.0 million this quarter compared to $0.1 million in the
first quarter of last year.
"Our core earnings continue to show solid growth, despite a weakening in
consumer demand. The start-up of Toronto and the integration of new
accounts generated planned one-time expenses, but I am pleased with the
roll-outs overall. Our ability to sustain growth in non-cigarette gross
profits validates that our marketing programs are resonating with our
customers, a trend I expect will continue for the foreseeable future," said
Michael Walsh, President and Chief Executive Officer of Core-Mark.
Guidance for 2008
The Company reiterated its estimates that annual net sales for 2008 will
approximate $6.0 billion, which is an 8% increase in net sales compared to
2007. This increase is expected to be driven primarily by market share
gains offset by continued weakness in cigarette carton sales. Capital
expenditures are expected to be approximately $20 million for 2008.
Investors Conference Call
Core-Mark will host an earnings call on Wednesday, May 14th, 2008 at 9:00
a.m. Pacific time during which management will review the results of the
first quarter ended March 31, 2008. The call may be accessed by dialing
1-800-588-4973 using the code 21590821. The call may also be listened to
on the internet website
www.core-mark.com.
An audio replay will be available for two weeks following the call by
dialing 888-843-8996 using the same code. The replay will also be
available via webcast at
www.core-mark.com.
Core-Mark
Core-Mark is one of the largest broad-line, full-service wholesale
distributors of packaged consumer products to the convenience retail
industry in North America. Founded in 1888, Core-Mark provides
distribution and logistics services as well as marketing programs to over
22,000 retail locations in 45 states and five Canadian provinces through 25
distribution centers, two of which Core-Mark operate as third party
logistics providers. Core-Mark services traditional convenience retailers,
grocers, drug, liquor and specialty stores, and other stores that carry
consumer packaged goods. For more information, please visit
www.core-mark.com
Safe Harbor
Except for historical information, the statements made in this press
release are forward-looking statements made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on certain assumptions or estimates,
discuss future expectations, describe future plans and strategies, contain
projections of results of operations or of financial condition or state
other forward-looking information. Our ability to predict results or the
actual effect of future plans or strategies is inherently uncertain.
Although we believe that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, actual results and
performance could differ materially from those set forth in the
forward-looking statements. Forward-looking statements in some cases can be
identified by the use of words such as "may," "will," "should,"
"potential," "intend," "expect," "seek," "anticipate," "estimate,"
"believe," "could," "would," "project," "predict," "continue," "plan,"
"propose" or other similar words or expressions. These forward-looking
statements are based on the current plans and expectations of our
management and are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical results or those
discussed in such forward-looking statements.
Factors that might cause or contribute to such differences include, but are
not limited to our dependence on the convenience store industry for our
revenues; competition; price increases; our dependence on relatively few
suppliers; the low-margin nature of cigarette and consumable goods
distribution; certain distribution centers' dependence on a few relatively
large customers; competition in the labor market and collective bargaining
agreements; product liability claims and manufacturer recalls of products;
fuel price increases; our dependence on our senior management and key
personnel; currency exchange rate fluctuations; our ability to borrow
additional capital; governmental regulations and changes thereto;
earthquake and natural disaster damage; failure or disruptions to our
information systems; a general decline in cigarette sales volume;
competition from sales of deep-discount brands and illicit and other low
priced sales of cigarettes. See the "Risk Factors" section included in our
Form 10-K, our most recent Form 10-Q and all other information discussed in
our filings with the Securities and Exchange Commission for a discussion of
risks and uncertainties that may affect our business. Except as provided by
law, we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
March 31, December 31,
2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 19.6 $ 21.3
Restricted cash 12.6 11.5
Accounts receivable, net of allowance for
doubtful accounts of $8.9 and $9.3,
respectively 133.8 135.7
Other receivables, net 31.6 32.1
Inventories, net 202.3 216.4
Deposits and prepayments 32.9 36.9
Deferred income taxes 8.4 8.4
------------ ------------
Total current assets 441.2 462.3
------------ ------------
Property and equipment, net 68.7 69.3
Deferred income taxes 7.4 7.2
Goodwill 2.8 2.8
Other non-current assets, net 37.8 35.5
------------ ------------
Total assets $ 557.9 $ 577.1
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 62.7 $ 54.3
Book overdrafts 21.2 21.1
Cigarette and tobacco taxes payable 91.2 94.2
Accrued liabilities 55.2 56.7
------------ ------------
Total current liabilities 230.3 226.3
------------ ------------
Long-term debt, net 9.0 29.7
Other tax liabilities 13.7 13.7
Claims liabilities, net of current portion 31.3 31.2
Pension liabilities 9.8 9.7
------------ ------------
Total liabilities 294.1 310.6
------------ ------------
Stockholders' equity:
Common stock; $0.01 par value (50,000,000
shares authorized; 10,531,037 and 10,445,886
shares issued and outstanding at
March 31, 2008 and December 31, 2007,
respectively) 0.1 0.1
Additional paid-in capital 203.5 202.6
Treasury stock at cost, 97,854 shares of
common stock (2.9) -
Retained earnings 63.9 64.4
Accumulated other comprehensive income (loss) (0.8) (0.6)
------------ ------------
Total stockholders' equity 263.8 266.5
------------ ------------
------------ ------------
Total liabilities and stockholders'
equity $ 557.9 $ 577.1
============ ============
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
March 31,
2008 2007
--------- ---------
Net sales $ 1,345.4 $ 1,276.1
Cost of goods sold 1,264.2 1,200.6
--------- ---------
Gross profit 81.2 75.5
--------- ---------
Warehousing and distribution expenses 45.9 40.1
Selling, general and administrative expenses 34.1 31.2
Amortization of intangible assets 0.5 0.4
--------- ---------
Total operating expenses 80.5 71.7
--------- ---------
Income from operations 0.7 3.8
Interest expense 0.5 0.9
Interest income (0.3) (0.2)
Foreign currency transaction losses, net 1.0 0.1
--------- ---------
Income (loss) before income taxes (0.5) 3.0
Provision for income taxes - 0.9
--------- ---------
Net income (loss) $ (0.5) $ 2.1
========= =========
Basic income (loss) per common share $ (0.05) $ 0.20
========= =========
Diluted income (loss) per common share $ (0.05) $ 0.19
========= =========
Basic weighted average shares 10.6 10.3
Diluted weighted average shares 10.6 11.1
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
March 31,
2008 2007
-------- --------
Cash flows from operating activities:
Net income (loss) $ (0.5) $ 2.1
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
LIFO and inventory provisions 2.3 2.1
Amortization of debt issuance costs 0.1 0.1
Amortization of stock-based compensation
expense 1.0 1.2
Bad debt expense, net 0.3 (0.2)
Depreciation and amortization 4.4 3.5
Foreign currency transaction losses, net 1.0 0.1
Changes in operating assets and liabilities:
Accounts receivable 1.0 6.8
Other receivables 0.1 3.3
Inventories 10.4 35.9
Deposits, prepayments and other non-current
assets 0.5 (9.7)
Accounts payable 9.0 13.8
Cigarette and tobacco taxes payable (1.8) 14.7
Pension, claims and other accrued
liabilities 1.3 (4.4)
Income taxes payable - (0.4)
-------- --------
Net cash provided by operating activities 29.1 68.9
-------- --------
Cash flows from investing activities:
Restricted cash (1.5) (1.9)
Additions to property and equipment, net (6.0) (2.0)
Capitalization of internally developed software (0.2) -
-------- --------
Net cash used in investing activities (7.7) (3.9)
-------- --------
Cash flows from financing activities:
Repayments under revolving credit facility, net (20.9) (71.9)
Repurchases of common stock shares (treasury
stock) (2.1) -
Proceeds from exercise of common stock options 0.1 1.1
Excess tax deductions associated with stock-based
compensation 0.1 0.5
Increase in book overdrafts - 1.9
-------- --------
Net cash used in financing activities (22.8) (68.4)
-------- --------
-------- --------
Effects of changes in foreign exchange rates (0.3) 0.1
-------- --------
Decrease in cash and cash equivalents (1.7) (3.3)
Cash and cash equivalents, beginning of period 21.3 19.9
-------- --------
Cash and cash equivalents, end of period $ 19.6 $ 16.6
======== ========
Supplemental disclosures:
Cash (refunded) paid during the period for:
Income taxes, includes interest paid, net of
refunds $ (3.5) $ 1.6
Interest $ 0.4 $ 1.2
Contact Information: Contact:
Ms Milton Gray Draper
Director of Investor Relations
650-589-9445 X3027