-- Sales increased 7% to $1.43 billion from $1.35 billion.
-- Gross profit increased 31% to $96.6 million from $73.8 million.
-- Income from operations increased to $23.7 million from $12.5 million.
-- Net income was $13.6 million compared to $6.9 million.
-- EPS was $1.20 per diluted share compared to $0.63.
First Six Months of 2007 Highlights - June 30, 2007 vs. June 30, 2006
-- Sales increased 7% to $2.71 billion from $2.52 billion.
-- Gross profit increased 24% to $172.1 million from $138.3 million.
-- Income from operations increased to $27.5 million from $16.4 million.
-- Net income was $15.7 million compared to $8.6 million.
-- EPS was $1.40 per diluted share compared to $0.79.
"Our results for the second quarter are solid, but I am more pleased about
the positioning of the Company for greater relevancy to the convenience
retail trade," said Michael Walsh, President and Chief Executive Officer of
Core-Mark. "The trends in our performance are good, and we continue to lay
the groundwork for future margin improvement and strategic initiatives."
Sales
Sales increased 7% for the quarter from $1.35 billion to $1.43 billion and
7% for the six months ended June 30 from $2.52 billion to $2.71 billion.
The increases were due primarily to incremental sales from our Pennsylvania
division and from organic growth, partially offset by the lost sales
resulting from a major Canadian tobacco manufacturer's decision in 2006 to
deliver products directly to retailers.
Included in sales was $346 million of excise taxes for the second quarter
2007, compared to $337 million in the second quarter of 2006 and $649
million for the six months ended June 30, 2007 compared to $617 million for
the same period in 2006.
Gross Profit
Gross profit for the second quarter of 2007 was $96.6 million, including
$1.1 million in cigarette inventory holding profits and $2.9 million in
LIFO expense. In the second quarter of 2006, gross profit was $73.8
million and included no cigarette inventory holding profits and $1.5
million in LIFO expense. The improvement in gross profit for the second
quarter of 2007 included a $13.3 million tax refund from the State of
Washington.
Gross profit for the six months ended June 30, 2007 was $172.1 million and
included $4.4 million in cigarette holding profits and $4.7 million in LIFO
expense. Gross profit for the same time period in 2006 was $138.3 million
and included $0.6 million in cigarette holding profits and $2.9 million in
LIFO expense. The improvement in gross profit for the first six months of
2007 included the aforementioned $13.3 million tax refund from the State of
Washington.
Income from Operations
Income from operations for the second quarter of 2007 was $23.7 million
compared to $12.5 million for the second quarter of 2006. This improvement
was driven significantly by the $13.3 million tax refund, offset slightly
by a $0.6 million severance expense. In 2006, second quarter operating
income included a $2.5 million reduction in expenses related primarily to
workers' compensation.
Income from operations for the six months ended June 30, 2007 was $27.5
million and was impacted by the $13.3 million tax refund and the $0.6
million in severance expense. For the six months ended June 30, 2006 income
from operations was $16.4 million and was impacted by a $3.6 million
reduction in expense related to workers compensation and favorable
settlements of certain payables and receivables.
Guidance for 2007
Management reiterates its guidance of $5.75 billion in revenues and
expectations of $24 million in capital expenditures for 2007.
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
21,000 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
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;
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; our
material weakness in internal controls over financial reporting; 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 busness. 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 share data)
(Unaudited)
June 30, December 31,
2007 2006
------------ -----------
Assets
Current assets:
Cash and cash equivalents $ 13.9 $ 19.9
Restricted cash 12.4 9.3
Accounts receivable, net of allowance for
doubtful accounts of $3.9 and $4.0
respectively 163.3 149.4
Other receivables, net 45.6 35.7
Inventories, net 212.5 219.4
Deposits and prepayments 28.0 17.0
Deferred Income Taxes 5.9 -
------------ -----------
Total current assets $ 481.6 450.7
Property and equipment, net 57.4 55.0
Goodwill 2.8 2.9
Other non-current assets, net 53.0 47.0
------------ -----------
Total assets $ 594.8 $ 555.6
============ ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 80.2 $ 51.6
Book overdrafts 18.3 15.5
Cigarette and tobacco taxes payable 92.7 67.2
Accrued liabilities 53.3 56.0
Income taxes payable 1.6 6.9
Deferred income taxes - 14.4
------------ -----------
Total current liabilities 246.1 211.6
Long-term debt, net 32.8 78.0
Other liabilities 13.8 3.6
Claims liabilities, net of current portion 37.9 37.5
Pension liabilities 9.1 9.2
------------ -----------
Total liabilities 339.7 339.9
------------ -----------
Stockholders' equity:
Common stock; $0.01 par value (50,000,000
shares authorized, 10,393,237 and 10,208,292
shares issued and outstanding at June 30, 2007
and December 31, 2006) 0.1 0.1
Additional paid-in capital 199.1 175.5
Retained earnings 55.9 40.2
Accumulated other comprehensive loss - (0.1)
------------ -----------
Total stockholders' equity 255.1 215.7
------------ -----------
Total liabilities and stockholders' equity $ 594.8 $ 555.6
============ ===========
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 1,434.0 $ 1,345.6 $ 2,710.1 $ 2,524.5
Cost of goods sold 1,337.4 1,271.8 2,538.0 2,386.2
--------- --------- --------- ---------
Gross profit 96.6 73.8 172.1 138.3
--------- --------- --------- ---------
Warehousing and distribution
expenses 42.9 36.4 83.0 69.5
Selling, general and
administrative expenses 29.5 24.5 60.7 51.7
Amortization of intangible
assets 0.5 0.4 0.9 0.7
--------- --------- --------- ---------
Total operating expenses 72.9 61.3 144.6 121.9
--------- --------- --------- ---------
Income from operations 23.7 12.5 27.5 16.4
Interest expense 0.6 1.0 1.5 2.0
Interest (income) (0.3) (0.3) (0.5) (0.5)
Foreign currency transaction
losses, net (0.7) (0.5) (0.6) (0.4)
--------- --------- --------- ---------
Income before income taxes 24.1 12.3 27.1 15.3
Provision for income taxes 10.5 5.4 11.4 6.7
--------- --------- --------- ---------
Net income $ 13.6 $ 6.9 $ 15.7 $ 8.6
========= ========= ========= =========
Basic income per common
share $ 1.31 $ 0.69 $ 1.52 $ 0.87
Diluted income per common
share $ 1.20 $ 0.63 $ 1.40 $ 0.79
Basic weighted average shares 10.4 10.0 10.3 9.9
Diluted weighted average shares 11.3 11.0 11.2 10.9
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six months ended
June 30,
----------------
2007 2006
------- -------
Cash flows from operating activities:
Net income $ 15.7 $ 8.6
Adjustments to reconcile net income to net cash
provided by operating activities:
LIFO and inventory reserves 5.2 3.4
Amortization of stock-based compensation expense 2.4 2.2
Allowance for doubtful accounts (0.1) (0.3)
Depreciation and amortization 7.6 5.8
Foreign currency transaction gains, net (0.6) (0.4)
Deferred income taxes - (0.2)
Changes in operating assets and liabilities:
Accounts receivable (12.9) (25.8)
Other receivables (8.8) (1.8)
Inventories 3.8 7.0
Deposits, prepayments and other non-current assets (12.9) (8.9)
Accounts payable 28.3 14.0
Cigarette and tobacco taxes payable 23.1 (4.2)
Income taxes payable (2.1) -
Pension, claims and other accrued liabilities (4.3) (3.6)
Net cash provided (used) by operating activities 44.4 (4.2)
------- -------
Cash flows from investing activities:
Restricted cash (2.1) (3.6)
Acquisition of business, net of cash purchased - (55.8)
Additions to property and equipment, net (7.2) (3.8)
Proceeds from sale of fixed assets 0.1 -
------- -------
Net cash used in investing activities (9.2) (63.2)
------- -------
Cash flows from financing activities:
Borrowing (repayments) under 2005 revolving credit
facility, net (45.2) 67.2
Cash proceeds from exercise of common stock options 1.8 1.7
Excess tax deductions associated with stock-based
compensation 0.9 1.2
Increase (decrease) in book overdrafts 2.8 (8.3)
------- -------
Net cash provided by (used in) financing
activities (39.7) 61.8
------- -------
Effects of changes in foreign exchange rates (1.5) (0.3)
Decrease in cash and cash equivalents (6.0) (5.9)
Cash and cash equivalents, beginning period 19.9 30.0
------- -------
Cash and cash equivalents, end of period $ 13.9 $ 24.1
======= =======
Supplemental disclosures:
Cash paid during the period for:
Income Taxes, net of refunds $ 13.8 $ 5.1
Interest paid $ 1.9 $ 2.0
Contact Information: Contact: Ms. Milton Gray Draper Director of Investor Relations 650-589-9445 X3027