SOUTH SAN FRANCISCO, March 16, 2007 (PRIME NEWSWIRE) -- Core-Mark Holding Company, Inc. (Nasdaq:CORE) announced today its financial results for fourth quarter and full-year ended December 31, 2006.
Fourth Quarter 2006 Highlights -- 4Q 2006 vs. 4Q 2005 * Sales increased 8% to $1.3 billion from $1.2 billion. * Gross profits increased 24% to $80.4 million from $64.7 million. * Income from operations decreased to $13.9 million from $19.5 million. This $5.6 million decline was impacted most significantly by a net $6.7 million benefit in the prior period from the reduction in expenses related to the Fleming bankruptcy. * Net income was $7.6 million compared to $8.4 million. * EPS was $0.69 per diluted share compared to $0.79. Fiscal Year 2006 Highlights -- Fiscal Year 2006 vs. Fiscal Year 2005 * Sales increased 9% to $5.3 billion from $4.9 billion. * Gross profits increased 10% to $297.7 million from $271.0 million. * Income from operations was $38.5 million in 2006 vs. $44.0 million in 2005. This $5.5 million decline was impacted most significantly by a net $5.4 million benefit in the prior period from the reduction in expenses related primarily to the Fleming bankruptcy and unanticipated insurance recoveries. * Net income increased by 44% to $20.6 million from $14.3 million. * EPS increased by 36% to $1.87 per diluted share from $1.37. Net income and EPS increases were driven significantly by the $6.2 million loss on early extinguishment of debt experienced in 2005, but not in 2006.
"This year has been one of delivering quality earnings and building for our future. We are quite pleased with the 2006 results of our vendor consolidation and acquisition strategic initiatives. We look forward to furthering these initiatives in 2007," said Michael Walsh, President and Chief Executive Officer of Core-Mark.
Sales
Sales increased 8% for the quarter from $1.2 billion to $1.3 billion and increased 9% for the year from $4.9 billion to $5.3 billion. Factors affecting these results were the lost sales from Imperial Tobacco, the sales we enjoyed as a result of our acquisition and organic growth.
Excise taxes, included in our sales, were $313 million for the fourth quarter 2006 compared to $304 million in 2005. Total excise taxes for the year were $1.3 billion in 2006 compared to $1.2 billion in 2005.
Gross Profits
Gross profits for the fourth quarter of 2006 were $80.4 million and included $3.5 million in cigarette inventory holding profits and $0.8 million in LIFO income. In the fourth quarter of 2005 gross profits were $64.7 million and include $0.3 million in cigarette inventory holding profits and $2.5 million LIFO expense.
Gross profits for 2006 were $297.7 million compared to $271.0 million for 2005 and include cigarette inventory holding profits of $4.1 million in 2006 and $5.7 million in 2005. LIFO expense for 2006 was $2.9 million and $7.5 million in 2005.
Income from Operations
Income from operations for the fourth quarter 2006 was $13.9 million compared to $19.5 million for the fourth quarter of 2005. Income from operations for 2006 was $38.5 million compared to $44.0 million in 2005.
Income from operations for the fourth quarter 2006 was impacted by a $2.0 million increase in professional services costs related primarily to first year Sarbanes-Oxley compliance requirements and $0.9 million in costs related to the integration of the new Pennsylvania division and closure of the Victoria distribution center. These amounts are offset by a $3.4 million reduction in expenses related primarily to the Fleming bankruptcy and unanticipated insurance recoveries.
In 2005, fourth quarter operating income included a $9.5 million reduction in expenses related primarily to the Fleming bankruptcy.
Income from operations in 2006 were affected by a $2.8 million increase in professional services costs driven primarily by our Sarbanes-Oxley compliance requirements and $1.5 million in costs related to the integration of the new Pennsylvania division and closure of the Victoria distribution center. These amounts were offset by a $7.0 million reduction in expenses related primarily to the Fleming bankruptcy and unanticipated insurance recoveries.
Income from operations in 2005 included a $12.4 million reduction in expenses related primarily to the Fleming bankruptcy and to unanticipated insurance recoveries.
Interest & Early Extinguishment of Debt
Interest expense, net of interest income, was $1.3 million in the fourth quarter of 2006. This compares to $0.5 million in the fourth quarter of 2005. The increase was due primarily to the acquisition completed in 2006. Interest expense, net of interest income, was $3.8 million in 2006 and $10.0 million in 2005. This decrease was due primarily to lower rates in our 2005 Credit Facility.
In 2005, the Company reported a $6.2 million loss on early extinguishment of debt related to its refinancing activity of which $3.6 million was recorded in the fourth quarter.
Guidance for 2007
Management currently expects $5.75 billion in revenues for 2007. Our capital expenditures are expected to be $16 million for 2007.
Annual Meeting
Core-Mark has scheduled its annual meeting for May 15, 2006 at 2 o'clock in the afternoon in Burlingame, California at the Hyatt Regency located at 1333 Bayshore Highway. Stockholders of record as of March 23, 2007 will be entitled to vote at the Annual Meeting.
Conference Call
Core-Marks 4Q and year-end conference call will be held Tuesday March 20, 2007 at 9:00 a.m. Pacific (noon Eastern) to discuss these results. The call is expected to last one hour.
This call may be accessed by dialing 1-866-877-3102 or for international callers 706-679-6987 with the code 2611543. The webcast of this call is available at www.core-mark.com.
An audio replay will be available for two weeks following the call by dialing 800-642-1687 or 706-645-9291 using the same code of 2611543. The replay is also available via the 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 24 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.
The Core-Mark Holding logo is available at http://www.primezone.com/newsroom/prs/?pkgid=2987
Safe Harbor
This press release contains information constituting "forward-looking statements." Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan," "continue," or other similar words. These forward-looking statements are based on the current plans, estimates 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 anticipated. These factors include, but are not limited to: economic conditions affecting the cigarette and consumable goods industry; adverse effect of legislation and other matters affecting the cigarette industry; increased competition in the distribution industry; our inability to retain and attract customers; the negative affects of product liability claims; failure of our suppliers to provide products; increases in fuel prices; the loss of key personnel or our inability to attract and retain new qualified personnel; currency exchange rate fluctuations; the negative effects of our reorganization on our customer, supplier and employee relationships; and our ability to successfully integrate acquisitions and realize anticipated benefits. See the "Risk Factors" section included in our Form 10-K, the "Factors That May Affect Future Results" section in our most recent Form 10-Q and all of the other information discussed in our filings with the Securities and Exchange Commission for a discussion of risks and uncertainties that may affect our business.
These forward-looking statements speak only as of the date of this press release. 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
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
December 31, December 31,
2006 2005
-----------------------------
Assets
Current assets:
Cash and cash equivalents $ 19.9 $ 30.0
Restricted cash 9.3 10.8
Accounts receivable, net of allowance
for doubtful accounts of $4.0 and
$6.5, respectively 149.4 128.6
Other receivables, net 35.7 27.2
Inventories, net 219.4 199.7
Deposits and prepayments 17.0 18.6
-----------------------------
Total current assets 450.7 414.9
Property and equipment, net 55.0 40.9
Deferred income taxes -- 2.1
Goodwill 2.9 --
Other non-current assets, net 47.0 52.5
-----------------------------
Total assets $ 555.6 $ 510.4
=============================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 51.6 $ 46.3
Book overdrafts 15.5 20.2
Cigarette and tobacco taxes payable 67.2 64.0
Accrued liabilities 56.0 59.3
Income taxes payable 6.9 6.0
Deferred income taxes 14.4 13.3
-----------------------------
Total current liabilities 211.6 209.1
Long-term debt, net 78.0 59.6
Other tax liabilities 3.6 3.9
Claims liabilities, net of current
portion 37.5 41.0
Pension liabilities 9.2 12.2
-----------------------------
Total liabilities 339.9 325.8
-----------------------------
Commitments and contingencies
Stockholders' equity:
Common stock; $0.01 par value
(50,000,000 shares authorized;
10,208,292 and 9,809,929 shares
issued and outstanding at
December 31, 2006 and December 31,
2005, respectively) 0.1 0.1
Additional paid-in capital 175.5 166.1
Retained earnings 40.2 19.6
Accumulated other comprehensive loss (0.1) (1.2)
-----------------------------
Total stockholders' equity 215.7 184.6
-----------------------------
Total liabilities and stockholders'
equity $ 555.6 $ 510.4
=============================
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Net sales $1,307.9 $1,209.9 $5,314.4 $4,891.1
Cost of goods sold 1,227.5 1,145.2 5,016.7 4,620.1
-------- -------- -------- --------
Gross profit 80.4 64.7 297.7 271.0
-------- -------- -------- --------
Warehousing and distribution
expenses 39.3 33.2 151.1 135.7
Selling, general and
administrative expenses 26.8 11.6 106.6 90.0
Amortization of intangible
assets 0.4 0.4 1.5 1.3
-------- -------- -------- --------
Total operating expenses 66.5 45.2 259.2 227.0
-------- -------- -------- --------
Income from operations 13.9 19.5 38.5 44.0
Interest expense 1.5 1.1 4.9 11.1
Interest (income) (0.2) (0.6) (1.1) (1.1)
Foreign currency transaction
(gains) losses, net 0.7 0.3 0.3 0.9
Loss on early extinguishment
of debt -- 3.6 -- 6.2
Amortization of debt
issuance costs 0.1 0.1 0.4 1.0
-------- -------- -------- --------
Income before income taxes 11.8 15.0 34.0 25.9
Provision for income taxes 4.2 6.6 13.4 11.6
-------- -------- -------- --------
Net income $ 7.6 $ 8.4 $ 20.6 $ 14.3
======== ======== ======== ========
Basic income per common
share $ 0.74 $ 0.85 $ 2.05 $ 1.46
Diluted income per common
share $ 0.69 $ 0.79 $ 1.87 $ 1.37
Basic weighted average
shares 10.2 9.8 10.0 9.8
Diluted weighted average
shares 11.0 10.6 11.0 10.5
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Year Ended
December 31,
-----------------------
2006 2005
-----------------------
Cash flows from operating activities:
Net income $ 20.6 $ 14.3
Adjustments to reconcile net income to net
cash provided by operating activities:
LIFO and inventory provisions 3.7 7.5
Amortization of stock-based compensation
expense 4.4 4.0
Bad debt reserves, net (1.2) (0.3)
Depreciation and amortization 13.6 13.5
Loss on extinguishment of debt -- 4.4
Foreign currency transaction (gains)
losses, net 0.3 0.9
Deferred income taxes 3.2 (2.7)
Changes in operating assets and liabilities:
Accounts receivable (1.5) 5.1
Other receivables (4.9) 8.3
Inventories (3.3) (19.5)
Deposits, prepayments and other non-current
assets 5.7 (6.1)
Accounts payable 4.9 4.4
Cigarette and tobacco taxes payable 2.7 13.6
Pension, claims and other accrued liabilities
and income taxes payable (10.7) (13.9)
------- -------
Net cash provided by operating activities 37.5 33.5
------- -------
Cash flows from investing activities:
Restricted cash 1.5 1.7
Acquisition of business, net of cash acquired (55.5) --
Additions to property and equipment, net (12.8) (6.6)
Proceeds from sale of fixed assets 0.2 --
------- -------
Net cash used in investing activities (66.6) (4.9)
------- -------
Cash flows from financing activities:
Payments under 2004 revolving credit
facility, net -- (45.0)
Borrowings under 2005 revolving credit
facility, net 18.4 59.6
Principal payments on long-term debt -- (35.5)
Cash proceeds from exercise of common stock
options 3.2 --
Excess tax deductions associated with
stock-based compensation 1.8 --
Changes in debt issuance costs -- (2.1)
Increase (decrease) in book overdrafts (4.7) (0.5)
------- -------
Net cash provided by (used in) financing
activities 18.7 (23.5)
------- -------
Effects of changes in foreign exchange rates 0.3 (1.3)
(Decrease) increase in cash and cash
equivalents (10.1) 3.8
Cash and cash equivalents, beginning of period 30.0 26.2
------- -------
Cash and cash equivalents, end of period $ 19.9 $ 30.0
======= =======
Supplemental disclosures:
Cash paid during the period for:
Income taxes, net of refunds $ 8.2 $ 21.4
Interest paid $ 5.5 $ 11.5