SOUTH SAN FRANCISCO, CA--(Marketwire - August 7, 2008) - Core-Mark Holding Company, Inc.
(NASDAQ: CORE), one of the leading broad-line distributors in North
America, announced financial results for the second quarter ended June 30,
2008.
Second Quarter
Net sales were $1.53 billion for the second quarter of 2008 compared to
$1.43 billion for the same period in 2007, a 7.0% increase. The increase
in sales was accomplished despite a 1.9% decline in cigarette carton sales.
Non-cigarette sales grew 14.0% in the second quarter of 2008 compared to
last year's second quarter.
Gross profit for the second quarter of 2008 was $91.1 million compared to
$96.6 million in the second quarter of last year. The second quarter of
2007 included a $13.3 million tobacco tax refund that did not recur in the
second quarter of 2008. Gross profit, excluding the tax refund, cigarette
holding profits and LIFO expense, grew from $85.1 million in the second
quarter of 2007 to $92.8 million, a 9.1% increase. This improvement was
driven by a 12.0% increase in the non-cigarette categories.
The Company's operating expenses for the second quarter of 2008 increased
to $82.4 million from $72.9 million in the second quarter of 2007.
Approximately 31% of this increase was attributable to start-up and
operating expenses at our new Toronto Division, 29% was attributable to
sales growth and cost overruns at two U.S. divisions due to integration of
new customers and 15% was due to higher net fuel costs.
Net Income for the second quarter of 2008 was $5.7 million or $0.51 per
diluted share, compared to net income of $13.6 million, or $1.20 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 $0.1 million this quarter compared to a pre-tax foreign
exchange gain of $0.7 million in the second quarter of last year.
"I am fairly pleased with our top line growth for the quarter, given
consumer buying trends and the economy. I am considerably less pleased
with our operating expenses associated with the two divisions and uncovered
fuel costs. These issues should and are improving as we move into the
third quarter," said Michael Walsh, President and Chief Executive Officer
of Core-Mark.
First Six Months
Net sales were $2.88 billion for the first half of 2008 compared to $2.71
billion for the same period in 2007, a 6.3% increase. The increase in
sales was accomplished despite a 1.6% decline in cigarette carton sales.
Non-cigarette sales grew 12.6% in the first six months of 2008 compared to
the first six months in 2007.
Gross profit for the first six months of 2008 was $172.3 million compared
to $172.1 million in the first six months of last year. The first half of
2007 included a $13.3 million tobacco tax refund and an additional $3.0
million in cigarette holding profits compared to the same period this year.
Gross profit, excluding the tax refund, cigarette holding profits and LIFO
expense, grew from $159.1 million in the first half of 2007 to $175.6
million, a 10.4% increase. This improvement was driven by a 14.5% increase
in the non-cigarette categories.
The Company's operating expenses for the first six months of 2008 increased
to $162.9 million from $144.6 million in the first six months of 2007.
Approximately 30% was attributable to start-up and operational expenses for
the new Toronto Division, 21% was attributable to sales growth and cost
overruns at two U.S. divisions due to integration of new customers, 13% was
due to increases in healthcare and worker's compensation expense and 11%
was due to higher net fuel costs.
Net Income for the first six months of 2008 was $5.2 million or $0.47 per
diluted share, compared to net income of $15.7 million, or $1.40 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 $1.1 million for the first six months of 2008 compared to
a pre-tax foreign exchange gain of $0.6 million for the same period last
year.
Guidance for 2008
The Company estimates its 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 primarily driven by market share gains offset by
continued weakness in cigarette carton sales and includes the incremental
sales from our New England Division. Capital expenditures are expected to
be approximately $20 million for 2008.
Investors Conference Call
Core-Mark will host an earnings call on Friday, August 8, 2008 at 9:00 a.m.
Pacific time during which management will review the results of the second
quarter ended June 30, 2008. The call may be accessed by dialing
1-800-661-2563 using the code 22322642. 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 approximately
24,000 retail locations in 50 states and five Canadian provinces through 26
distribution centers, two of which Core-Mark operates 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; uncertain and recent economic conditions; 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; integration of acquired
businesses; 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)
June 30, December 31,
2008 2007
--------- ------------
Assets
Current assets:
Cash and cash equivalents $ 21.9 $ 21.3
Restricted cash 12.9 11.5
Accounts receivable, net of allowance for
doubtful accounts of $8.7 and $9.3,
respectively 164.5 135.7
Other receivables, net 35.5 32.1
Inventories, net 219.4 216.4
Deposits and prepayments 47.2 36.9
Deferred income taxes 8.4 8.4
--------- ------------
Total current assets 509.8 462.3
--------- ------------
Property and equipment, net 74.8 69.3
Deferred income taxes 7.4 7.2
Goodwill 3.4 2.8
Other non-current assets, net 38.3 35.5
--------- ------------
Total assets $ 633.7 $ 577.1
========= ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 76.3 $ 54.3
Book overdrafts 18.3 21.1
Cigarette and tobacco taxes payable 96.7 94.2
Accrued liabilities 56.5 56.7
--------- ------------
Total current liabilities 247.8 226.3
--------- ------------
Long-term debt, net 64.2 29.7
Other long-term liabilities 13.4 13.7
Claims liabilities, net of current portion 31.7 31.2
Pension liabilities 9.7 9.7
--------- ------------
Total liabilities 366.8 310.6
--------- ------------
Stockholders' equity:
Common stock; $0.01 par value (50,000,000 shares
authorized; 10,602,055 and 10,445,886 shares
issued and outstanding at June 30, 2008 and
December 31, 2007, respectively) 0.1 0.1
Additional paid-in capital 205.5 202.6
Treasury stock at cost, 268,085 shares of common
stock (7.5) --
Retained earnings 69.6 64.4
Accumulated other comprehensive (loss) (0.8) (0.6)
--------- ------------
Total stockholders' equity 266.9 266.5
--------- ------------
Total liabilities and stockholders' equity $ 633.7 $ 577.1
========= ============
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,
2008 2007 2008 2007
--------- --------- --------- ---------
Net sales $ 1,534.6 $ 1,434.0 $ 2,880.0 $ 2,710.1
Cost of goods sold 1,443.5 1,337.4 2,707.7 2,538.0
--------- --------- --------- ---------
Gross profit 91.1 96.6 172.3 172.1
--------- --------- --------- ---------
Warehousing and distribution
expenses 51.0 42.9 96.9 83.0
Selling, general and
administrative expenses 30.9 29.5 65.0 60.7
Amortization of intangible
assets 0.5 0.5 1.0 0.9
--------- --------- --------- ---------
Total operating expenses 82.4 72.9 162.9 144.6
--------- --------- --------- ---------
Income from operations 8.7 23.7 9.4 27.5
Interest expense 0.4 0.6 0.9 1.5
Interest income (0.4) (0.3) (0.7) (0.5)
Foreign currency transaction
losses (gains), net 0.1 (0.7) 1.1 (0.6)
--------- --------- --------- ---------
Income before income taxes 8.6 24.1 8.1 27.1
Provision for income taxes 2.9 10.5 2.9 11.4
--------- --------- --------- ---------
Net income $ 5.7 $ 13.6 $ 5.2 $ 15.7
========= ========= ========= =========
Basic income per common share $ 0.54 $ 1.31 $ 0.49 $ 1.52
========= ========= ========= =========
Diluted income per common share $ 0.51 $ 1.20 $ 0.47 $ 1.40
========= ========= ========= =========
Basic weighted average shares 10.5 10.4 10.6 10.3
Diluted weighted average shares 11.0 11.3 11.1 11.2
CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
June 30,
2008 2007
-------- --------
Cash flows from operating activities:
Net income $ 5.2 $ 15.7
Adjustments to reconcile net income to net cash
provided by operating activities:
LIFO and inventory provisions 6.2 5.2
Amortization of debt issuance costs 0.2 0.2
Amortization of stock-based compensation
expense 1.9 2.4
Bad debt expense, net 0.4 (0.1)
Depreciation and amortization 8.4 7.4
Foreign currency transaction losses (gains),
net 1.1 (0.6)
Deferred income taxes (0.1) --
Changes in operating assets and liabilities:
Accounts receivable (17.5) (12.9)
Other receivables (3.8) (8.8)
Inventories (0.9) 3.8
Deposits, prepayments and other non-current
assets (13.8) (12.9)
Accounts payable 22.3 28.3
Cigarette and tobacco taxes payable 3.7 23.1
Pension, claims and other accrued
liabilities (1.5) (4.3)
Income taxes payable -- (2.1)
-------- --------
Net cash provided by operating activities 11.8 44.4
-------- --------
Cash flows from investing activities:
Restricted cash (1.8) (2.1)
Acquisition of business, net of cash acquired (26.4) --
Additions to property and equipment, net (8.0) (7.2)
Proceeds from sale of fixed assets 0.1 0.1
Capitalization of internally developed software (0.4) --
-------- --------
Net cash used in investing activities (36.5) (9.2)
-------- --------
Cash flows from financing activities:
Borrowings (Repayments) under revolving credit
facility, net 34.2 (45.2)
Repurchases of common stock shares (treasury stock) (6.9) --
Proceeds from exercise of common stock options 0.9 1.8
Excess tax deductions associated with stock-based
compensation 0.2 0.9
(Decrease) Increase in book overdrafts (2.8) 2.8
-------- --------
Net cash provided from (used in) financing
activities 25.6 (39.7)
-------- --------
Effects of changes in foreign exchange rates (0.3) (1.5)
-------- --------
Increase (Decrease) in cash and cash equivalents 0.6 (6.0)
Cash and cash equivalents, beginning of period 21.3 19.9
-------- --------
Cash and cash equivalents, end of period $ 21.9 $ 13.9
======== ========
Supplemental disclosures:
Cash paid during the period for:
Income taxes, includes interest paid, net of
refunds $ 5.8 $ 13.8
Interest $ 0.7 $ 1.9
Contact Information: Contact:
Ms Milton Gray Draper
Director of Investor Relations
650-589-9445 X3027