Core-Mark Holding Company, Inc. (NASDAQ:CORE) ("the Company"), one
of the largest marketers of fresh and broad-line supply solutions
to the convenience retail industry in North America, announced
financial results for the second quarter ended June 30, 2017.
“Core-Mark was able to generate modest sales
growth in a weaker-than-expected second quarter retail sales
environment, but our overall performance fell short of our
standards,” said Tom Perkins, President and Chief Executive
Officer. “Our focus is on improving operational execution and
leveraging our operating costs as we grow Core-Mark, as well as,
continuing to execute on our core growth strategies where we are
making good progress. The challenges of managing through a
soft convenience industry sales environment and our operating
efficiency initiatives are reflected in our revised outlook for
2017. We remain confident in our long-term growth thesis and
believe we are positioning Core-Mark for enhanced performance and
value creation in the years to come.”
Second Quarter Results
Net sales increased 3.1% to $3.8 billion for the
second quarter of 2017 compared to $3.7 billion for the same period
in 2016. Non-cigarette sales increased 7.4% while cigarette
sales increased 1.3%. Non-cigarette sales increased due
primarily to net market share gains, including our June 2016
acquisition of Pine State Convenience (Pine State), the addition of
7-Eleven Inc. (7-Eleven) and Wal-Mart Stores, Inc. (Walmart), and
incremental food/non-food sales to existing customers. Candy
sales grew 25.0%, driven primarily by sales to Walmart, which the
Company began servicing in May 2017. Sales of our Fresh
category grew 5.5% relative to the comparable period.
Cigarette sales benefited from increases in cigarette
manufacturers' prices and increases in cigarette excise taxes in
certain jurisdictions, offset by a decline in carton sales to
existing customers. In addition, both cigarette and
non-cigarette sales were impacted by a soft convenience industry
sales environment and the expiration of distribution agreements
with Circle-K, a brand of Alimentation Couche-Tard, Inc., and with
Kroger Convenience in 2017.
Gross profit decreased 1.0% to $186.1 million
for the second quarter of 2017 compared to $187.9 million for the
same period in 2016. The periods were impacted by a $6.1
million net reduction this year in cigarette inventory holding
gains, due to the timing of manufacturer price increases.
Remaining gross profit, a non-GAAP financial measure, increased
2.6% to $188.6 million from $183.8 million. The increase in
remaining gross profit for the three months ended June 30, 2017,
was driven primarily by net market share gains, including the
acquisition of Pine State and an increase in sales to existing
customers.
__________________________________________Note
(1): See the reconciliation of Diluted Earnings Per Share ("Diluted
EPS") to Diluted EPS excluding LIFO Expense in "Supplemental
Schedule for Items Impacting Diluted EPS."
The following table reconciles remaining gross
profit, a non-GAAP financial measure, to gross profit, its most
comparable financial measure under U.S. GAAP:
|
RECONCILIATION OF GROSS PROFIT (U.S. GAAP) TO
REMAINING GROSS PROFIT (NON-GAAP) |
(Unaudited and $ in millions) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended June
30, |
|
|
|
2017 |
|
2016 |
|
|
|
Amounts |
% of NetSales |
|
Amounts |
% of NetSales |
|
% Change |
Gross profit |
$ |
186.1 |
|
4.9 |
% |
|
$ |
187.9 |
|
5.1 |
% |
|
(1.0 |
)% |
Cigarette
inventory holding gains |
(0.9 |
) |
— |
% |
|
(7.0 |
) |
(0.2 |
)% |
|
|
Other
tobacco products (OTP) tax items
|
(1.2 |
) |
— |
% |
|
— |
|
— |
% |
|
|
LIFO
expense |
4.6 |
|
0.1 |
% |
|
2.9 |
|
0.1 |
% |
|
|
Remaining gross profit (Non-GAAP) |
$ |
188.6 |
|
5.0 |
% |
|
$ |
183.8 |
|
5.0 |
% |
|
2.6 |
% |
The Company’s operating expenses for the second
quarter of 2017 were $174.0 million compared to $160.2 million for
the same period in 2016. The increase in operating expenses
was due primarily to the addition of Pine State and costs related
to the servicing of 7-Eleven, which were higher than
expected. These increases were partially offset by cost
reductions related to the expiration of certain distribution
agreements in 2017. Operating expenses as a percentage of net
sales were 4.6% for the second quarter of 2017 compared to 4.3% for
the second quarter of 2016.
Net income was $6.9 million for the second
quarter of 2017 compared to $16.3 million for the same period in
2016. Adjusted EBITDA, a non-GAAP financial measure, was
$30.1 million for the second quarter of 2017 compared to $42.5
million for the second quarter of 2016.
The following table reconciles Adjusted EBITDA
to net income, its most comparable financial measure under U.S.
GAAP:
|
RECONCILIATION OF NET INCOME (U.S. GAAP) TO ADJUSTED
EBITDA (NON-GAAP) |
(Unaudited and $ in millions) |
|
|
|
|
|
|
|
For the Three MonthsEnded June
30, |
|
|
|
2017 |
|
2016 |
|
% Change |
|
|
|
|
|
|
Net income |
$ |
6.9 |
|
|
$ |
16.3 |
|
|
(57.7 |
%) |
Interest
expense, net (1) |
2.0 |
|
|
1.0 |
|
|
|
Provision
for income taxes |
4.3 |
|
|
10.1 |
|
|
|
Depreciation & amortization |
12.2 |
|
|
10.2 |
|
|
|
LIFO
expense |
4.6 |
|
|
2.9 |
|
|
|
Stock-based compensation expense |
1.2 |
|
|
1.7 |
|
|
|
Foreign
currency transaction (gains) loss, net |
(1.1 |
) |
|
0.3 |
|
|
|
Adjusted EBITDA (Non-GAAP) |
$ |
30.1 |
|
|
$ |
42.5 |
|
|
(29.2 |
%) |
______________________________________________
(1) Interest expense, net, is reported net of interest
income.
Diluted EPS were $0.15 for the second quarter of
2017 compared to $0.35 for the second quarter of 2016.
Diluted EPS excluding LIFO expense, a non-GAAP financial measure,
were $0.21 for the second quarter of 2017 compared to $0.39 for the
second quarter of 2016. See the attached “Supplemental
Schedule for Items Impacting Diluted EPS” following the financial
schedules for the reconciliation of Diluted EPS to Diluted EPS
excluding LIFO expense, as well as the Diluted EPS impact of
several other items.
First Six Months of 2017
Net sales increased 9.0% to $7.3 billion for the
first six months of 2017 compared to $6.7 billion for the same
period in 2016. Non-cigarette sales increased 10.2%, while
cigarette sales increased 8.6%. Non-cigarette sales increased
due primarily to market share gains, including our June 2016
acquisition of Pine State and the addition of 7-Eleven and Walmart,
as well as incremental food/non-food sales to existing
customers. Cigarette sales benefited from increases in
manufacturers’ prices and cigarette excise taxes in certain
jurisdictions, offset by a decline in carton sales to existing
customers. Both cigarette and non-cigarette sales were
impacted by a soft convenience industry sales environment and the
expiration of certain distribution agreements in 2017.
Gross profit increased 6.2% to $360.1 million
for the first six months of 2017 compared to $339.0 million for the
same period in 2016. Remaining gross profit, a non-GAAP
financial measure, increased 6.8% to $360.2 million from $337.3
million. The increases in gross profit and remaining gross
profit for the first six months of 2017 were driven primarily by
net market share gains, including the acquisition of Pine State and
an increase in sales to existing customers.
The following table reconciles remaining gross
profit, a non-GAAP financial measure, to gross profit, its most
comparable financial measure under U.S. GAAP:
|
RECONCILIATION OF GROSS PROFIT (U.S. GAAP) TO
REMAINING GROSS PROFIT (NON-GAAP) |
(Unaudited and $ in millions) |
|
|
|
|
|
|
|
|
|
For the Six Months Ended June
30, |
|
|
|
2017 |
|
2016 |
|
|
|
Amounts |
% of NetSales |
|
Amounts |
% of NetSales |
|
% Change |
Gross profit |
$ |
360.1 |
|
4.9 |
% |
|
$ |
339.0 |
|
5.1 |
% |
|
6.2 |
% |
Cigarette
inventory holding gains |
(7.5 |
) |
(0.1 |
)% |
|
(8.0 |
) |
(0.1 |
)% |
|
|
OTP tax
items |
(1.2 |
) |
— |
% |
|
— |
|
— |
% |
|
|
LIFO
expense |
8.8 |
|
0.1 |
% |
|
6.3 |
|
0.1 |
% |
|
|
Remaining gross profit (Non-GAAP)
|
$ |
360.2 |
|
4.9 |
% |
|
$ |
337.3 |
|
5.1 |
% |
|
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s operating expenses for the first
six months of 2017 were $345.8 million compared to $302.1 million
for the same period in 2016. The increase in operating
expenses was due primarily to the addition of Pine State and costs
related to the servicing of 7-Eleven. These increases were
partially offset by operating cost reductions related to the
expiration of certain distribution agreements in 2017.
Operating expenses as a percentage of net sales were 4.7% for the
first six months of 2017 compared to 4.5% for the first six months
of 2016.
Net income was $9.0 million for first six months
of 2017 compared to $22.0 million for the same period in
2016. Adjusted EBITDA, a non-GAAP financial measure, was
$49.7 million for the first six months of 2017 compared to $66.6
million for the same period in 2016.
The following table reconciles Adjusted EBITDA
to net income, its most comparable financial measure under U.S.
GAAP:
|
RECONCILIATION OF NET INCOME (U.S. GAAP) TO ADJUSTED
EBITDA (NON-GAAP) |
(Unaudited and $ in millions) |
|
|
|
|
|
|
|
For the Six MonthsEnded June 30, |
|
|
|
2017 |
|
2016 |
|
% Change |
|
|
|
|
|
|
Net income |
$ |
9.0 |
|
|
$ |
22.0 |
|
|
(59.1 |
%) |
Interest
expense, net (1) |
3.9 |
|
|
1.7 |
|
|
|
Provision
for income taxes |
3.1 |
|
|
13.6 |
|
|
|
Depreciation & amortization |
24.3 |
|
|
19.8 |
|
|
|
LIFO
expense |
8.8 |
|
|
6.3 |
|
|
|
Stock-based compensation expense |
2.3 |
|
|
3.6 |
|
|
|
Foreign
currency transaction gains, net |
(1.7 |
) |
|
(0.4 |
) |
|
|
Adjusted EBITDA (Non-GAAP) |
$ |
49.7 |
|
|
$ |
66.6 |
|
|
(25.4 |
%) |
______________________________________________
(1) Interest expense, net, is reported net of interest
income.
Diluted EPS were $0.20 for the first six months
of 2017 compared to $0.47 for the same period in 2016.
Diluted EPS excluding LIFO expense, a non-GAAP financial measure,
were $0.32 for the first six months of 2017 compared to $0.55 for
the first six months of 2016. See the attached “Supplemental
Schedule for Items Impacting Diluted EPS” following the financial
schedules for the reconciliation of Diluted EPS to Diluted EPS
excluding LIFO expense, as well as the Diluted EPS impact of
several other items.
Dividend
Core-Mark also announced today that its Board of
Directors has approved a $0.09 cash dividend per common
share. The dividend is payable on September 15, 2017 to
stockholders of record as of the close of business on
August 29, 2017.
Guidance for 2017
Based on Core-Mark’s performance to date, our
recent acquisition of Farner-Bocken Company and the current outlook
for the remainder of fiscal 2017, the Company is revising its
guidance for 2017 that was provided on March 1, 2017. For the
fiscal year ending December 31, 2017, the Company estimates net
sales in the range of approximately $15.6 billion to $15.8 billion,
an increase of approximately 2-3% from previous guidance of $15.2
to $15.5 billion. The Company now expects EBITDA to be
between $152 million and $159 million, compared to previous
guidance of $166 million to $173 million. Diluted earnings
per share are estimated to be between $0.96 to $1.03 and excluding
LIFO to be $1.20 to $1.27 compared to previous guidance of $1.18 to
$1.25 for diluted EPS, and $1.42 to $1.49 for diluted EPS excluding
LIFO. Key assumptions remain unchanged and include $18
million of LIFO expense, a 37.5% tax rate and 46.5 million
fully diluted shares outstanding. In addition, these
projections include cigarette inventory holding gains, but do not
include any other significant holding gains, nor any pension
settlement expenses.
Capital expenditure estimates for 2017 are
expected to be approximately $50 million, which will be utilized
for expansion projects, including expenditures associated with our
supply agreement with Walmart and maintenance investments.
Conference Call and Webcast Information
Core-Mark will host an earnings call on Tuesday,
August 8, 2017 at 9:00 a.m. Pacific time during which
management will review the results of the second quarter of
2017. The call may be accessed by dialing 1-800-588-4973
using the code 45326672. The call may also be listened to on
the Company’s website www.core-mark.com.
An audio replay will be available for
approximately one month following the call by dialing
1-888-843-7419 using the same code provided above. The replay
will also be available via webcast at www.core-mark.com for
approximately 90 days following the call.
Core-Mark
Core-Mark is one of the largest marketers of
fresh and broad-line supply solutions to the convenience retail
industry in North America. Founded in 1888, Core-Mark offers
a full range of products, marketing programs and technology
solutions to over 46,000 customer locations in the U.S. and Canada
through 32 distribution centers (excluding two distribution
facilities the Company operates as a third party logistics
provider). Core-Mark services traditional convenience
retailers, grocers, drug, liquor and specialty stores, and other
stores that carry convenience products. For more information,
please visit www.core-mark.com.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial
measures including remaining gross profit, Adjusted EBITDA, and
Diluted EPS excluding LIFO expense. We believe these non-GAAP
financial measures provide meaningful supplemental information for
investors regarding the performance of our business and facilitate
a meaningful period-to-period evaluation. We also believe
these measures allow investors to view results in a manner similar
to the method used by our management. We use these non-GAAP
financial measures in order to have comparable financial results to
analyze changes in our underlying business. These non-GAAP
measures should be considered as a supplement to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP. These measures may be defined
differently than other companies and therefore such measures may
not be comparable to ours. We strongly encourage investors
and stockholders to review our financial statements and publicly
filed reports in their entirety and not to rely on any single
financial measure.
Remaining gross profit is a measure we provide
to segregate the effects of LIFO expense, cigarette inventory
holding gains and other items that significantly affect the
comparability of gross profit.
Adjusted EBITDA is a measure used by us to
measure operating performance. Adjusted EBITDA is also among
the primary measures used externally by our investors, analysts and
peers in our industry for purposes of valuation and comparing our
results to other companies. Adjusted EBITDA is equal to net
income adding back net interest expense, provision for income
taxes, depreciation and amortization, LIFO expense, stock-based
compensation expense, and net foreign currency transaction gains or
losses.
Diluted EPS excluding LIFO expense is a measure
used by us to measure financial performance. Diluted EPS is
also among the primary measures used externally by our investors,
analysts and peers in our industry for purposes of valuation and
comparing our results to other companies.
We do not provide reconciliations for non-GAAP
estimates on a forward-looking basis (including the information
under (“Guidance for 2017” above) where we are unable to provide a
meaningful calculation or estimation of reconciling items and the
information is not available without unreasonable effort.
This is due to the inherent difficulty of forecasting the timing or
amount of various items that would impact the most directly
comparable forward-looking GAAP financial measure, that have not
yet occurred, are out of the company’s control and/or cannot be
reasonably predicted. For the same reasons, we are unable to
address the probable significance of the unavailable
information. Forward-looking non-GAAP financial measures
provided without the most directly comparable GAAP financial
measures may vary materially from the corresponding GAAP financial
measures.
The tables in this press release contain more
details on the GAAP financial measures that are most directly
comparable to non-GAAP financial measures and the related
reconciliations between these financial measures.
Forward-Looking Statements
Statements in this press release that are not
statements of historical fact are forward-looking statements made
pursuant to the safe-harbor provisions of the Securities Exchange
Act of 1934 and the Securities Act of 1933. These statements
include statements regarding our guidance for 2017 net sales,
Adjusted EBITDA, diluted EPS, diluted EPS excluding LIFO expense,
capital expenditures and related disclosures. 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. Forward-looking statements are made
only as of the date of this press release and are based on our
current intent, beliefs, plans and expectations. They involve risks
and uncertainties that could cause actual results to differ
materially from historical results or those described in or implied
by such forward-looking statements.
Factors that might cause or contribute to such
differences include, but are not limited to, risks and costs
associated with efforts to grow our business through expansion
activities; our dependence on qualified labor, our senior
management and other key personnel; our dependence on the
convenience retail industry for our revenues; competition in our
distribution markets; the dependence of some of our distribution
centers on a few relatively large customers; manufacturers or
retail customers adopting direct distribution channels; fuel and
other transportation costs; the low-margin nature of cigarette and
consumable goods distribution; our reliance on manufacturer
discount and incentive programs and cigarette excise stamping
allowances; our dependence on relatively few suppliers; risks and
costs associated with efforts to grow our business through
acquisitions; product liability and counterfeit product claims and
manufacturer recalls of products; our ability to achieve the
expected benefits of implementation of marketing initiatives;
failing to maintain our brand and reputation; failure or
disruptions of our information technology systems; unexpected
outcomes in legal proceedings; attempts by unions to organize our
employees; increasing expenses related to employee health benefits;
increasing labor costs related to contract employees; changes to
minimum wage laws; failure to comply with governmental regulations
or substantial changes to governmental regulations; earthquake and
natural disaster damage; increases in the number or severity of
insurance and claims expenses; declining cigarette sales volumes;
legislation and other matters negatively affecting the cigarette
and tobacco industry; increases in excise taxes or reduction in
credit terms by taxing jurisdictions; potential liabilities
associated with sales of cigarettes and other tobacco products;
changes to federal, state or provincial income tax legislation;
changes in the funding of our pension plans; reduction in the
payment of dividends; currency exchange rate fluctuations; our
ability to borrow additional capital; restrictive covenants in our
Credit Facility; and changes to accounting rules or
regulations. Refer to the “Risk Factors” section of our
Annual Report on Form 10-K for the year ended December 31,
2016 filed with the SEC on March 1, 2017 and Part II,
Item 1A, “Risk Factors” of any quarterly report on Form 10-Q
subsequently filed by us for a more comprehensive discussion of
these and other risk factors. We undertake no obligation to
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 and per share data) |
(Unaudited) |
|
|
|
|
|
June 30, |
|
December 31, |
|
2017 |
|
2016 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
25.8 |
|
|
$ |
26.4 |
|
Restricted cash |
15.3 |
|
|
15.3 |
|
Accounts receivable, net of allowance for doubtful accounts of
$6.8 and $7.1 as of June 30, 2017 and December 31, 2016,
respectively |
413.2 |
|
|
365.9 |
|
Other receivables, net |
90.1 |
|
|
106.5 |
|
Inventories, net |
529.9 |
|
|
596.6 |
|
Deposits and prepayments |
99.9 |
|
|
82.8 |
|
Total current assets (1) |
1,174.2 |
|
|
1,193.5 |
|
Property
and equipment, net |
211.6 |
|
|
194.7 |
|
Goodwill |
36.0 |
|
|
36.0 |
|
Other
intangible assets, net |
40.0 |
|
|
41.5 |
|
Other
non-current assets, net (1) |
24.1 |
|
|
26.5 |
|
Total assets (1) |
$ |
1,485.9 |
|
|
$ |
1,492.2 |
|
Liabilities and Stockholders’
Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
185.6 |
|
|
$ |
119.2 |
|
Book overdrafts |
94.8 |
|
|
37.9 |
|
Cigarette and tobacco taxes payable |
259.3 |
|
|
259.8 |
|
Accrued liabilities |
121.4 |
|
|
131.8 |
|
Total current liabilities (1) |
661.1 |
|
|
548.7 |
|
Long-term
debt |
231.5 |
|
|
347.7 |
|
Deferred
income taxes (1) |
26.0 |
|
|
25.3 |
|
Other
long-term liabilities |
11.4 |
|
|
11.5 |
|
Claims
liabilities |
25.9 |
|
|
26.8 |
|
Pension
liabilities |
2.4 |
|
|
2.4 |
|
Total liabilities (1) |
958.3 |
|
|
962.4 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value (100,000,000 shares authorized,
52,393,471 and 52,227,511 shares issued; 46,318,918 and
46,152,958 shares outstanding at June 30, 2017 and December 31,
2016, respectively) |
0.5 |
|
|
0.5 |
|
Additional paid-in capital |
274.1 |
|
|
275.5 |
|
Treasury stock at cost (6,074,553 shares of common stock at
June 30, 2017 and December 31, 2016) |
(70.7 |
) |
|
(70.7 |
) |
Retained earnings |
339.4 |
|
|
338.7 |
|
Accumulated other comprehensive loss |
(15.7 |
) |
|
(14.2 |
) |
Total stockholders’ equity |
527.6 |
|
|
529.8 |
|
Total liabilities and stockholders’ equity (1) |
$ |
1,485.9 |
|
|
$ |
1,492.2 |
|
|
|
|
|
(1) The
Company adopted ASU No. 2015-17, Income Taxes: Balance Sheet
Classification of Deferred Taxes, as of January 1, 2017.
Certain amounts as of December 31, 2016 have been reclassified to
reflect the effects of the adoption. |
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, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net
sales |
$ |
3,800.7 |
|
|
$ |
3,687.4 |
|
|
$ |
7,304.9 |
|
|
$ |
6,698.7 |
|
Cost of
goods sold |
3,614.6 |
|
|
3,499.5 |
|
|
6,944.8 |
|
|
6,359.7 |
|
Gross profit |
186.1 |
|
|
187.9 |
|
|
360.1 |
|
|
339.0 |
|
Warehousing and distribution expenses |
118.0 |
|
|
106.0 |
|
|
232.7 |
|
|
197.6 |
|
Selling,
general and administrative expenses |
54.2 |
|
|
53.0 |
|
|
109.5 |
|
|
102.4 |
|
Amortization of intangible assets |
1.8 |
|
|
1.2 |
|
|
3.6 |
|
|
2.1 |
|
Total operating expenses |
174.0 |
|
|
160.2 |
|
|
345.8 |
|
|
302.1 |
|
Income from operations |
12.1 |
|
|
27.7 |
|
|
14.3 |
|
|
36.9 |
|
Interest
expense |
(2.0 |
) |
|
(1.0 |
) |
|
(4.0 |
) |
|
(1.8 |
) |
Interest
income |
— |
|
|
— |
|
|
0.1 |
|
|
0.1 |
|
Foreign
currency transaction gains (loss), net |
1.1 |
|
|
(0.3 |
) |
|
1.7 |
|
|
0.4 |
|
Income before income taxes |
11.2 |
|
|
26.4 |
|
|
12.1 |
|
|
35.6 |
|
Provision
for income taxes |
(4.3 |
) |
|
(10.1 |
) |
|
(3.1 |
) |
|
(13.6 |
) |
Net income |
$ |
6.9 |
|
|
$ |
16.3 |
|
|
$ |
9.0 |
|
|
$ |
22.0 |
|
|
|
|
|
|
|
|
|
Basic and
diluted net income per common share (1) |
$ |
0.15 |
|
|
$ |
0.35 |
|
|
$ |
0.20 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
Basic
weighted-average shares |
46.3 |
|
|
46.3 |
|
|
46.3 |
|
|
46.3 |
|
|
|
|
|
|
|
|
|
Diluted
weighted-average shares |
46.4 |
|
|
46.5 |
|
|
46.4 |
|
|
46.5 |
|
|
|
|
|
|
|
|
|
Dividends
declared and paid per common share |
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.18 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
(1) Basic
and diluted earnings per share are calculated based on unrounded
actual amounts. |
CORE-MARK HOLDING COMPANY, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In millions) |
(Unaudited) |
|
|
|
Six Months EndedJune 30, |
|
2017 |
|
2016 |
Cash flows
from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
9.0 |
|
|
$ |
22.0 |
|
Adjustments to reconcile net income to net cash provided by
(used in) operating activities: |
|
|
|
LIFO and inventory provisions |
8.8 |
|
|
6.3 |
|
Amortization of debt issuance costs |
0.4 |
|
|
0.2 |
|
Stock-based compensation expense |
2.3 |
|
|
3.6 |
|
Bad debt expense, net |
0.4 |
|
|
1.0 |
|
Depreciation and amortization |
24.3 |
|
|
19.8 |
|
Foreign currency gains, net |
(1.7 |
) |
|
(0.4 |
) |
Deferred income taxes |
0.6 |
|
|
0.9 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable, net |
(46.8 |
) |
|
(77.6 |
) |
Other receivables, net |
16.6 |
|
|
(30.6 |
) |
Inventories, net |
60.0 |
|
|
(42.2 |
) |
Deposits, prepayments and other non-current assets |
(17.3 |
) |
|
(33.0 |
) |
Accounts payable |
66.1 |
|
|
29.8 |
|
Cigarette and tobacco taxes payable |
(1.8 |
) |
|
19.2 |
|
Pension, claims, accrued and other long-term liabilities |
(12.9 |
) |
|
28.3 |
|
Excess tax deductions associated with stock-based
compensation |
— |
|
|
(2.4 |
) |
Net cash provided by (used in) operating activities |
108.0 |
|
|
(55.1 |
) |
Cash flows
from investing activities: |
|
|
|
Acquisition of business, net of cash acquired |
— |
|
|
(88.4 |
) |
Change in restricted cash |
— |
|
|
4.7 |
|
Additions to property and equipment, net |
(30.8 |
) |
|
(22.8 |
) |
Capitalization of software and related development costs |
(2.8 |
) |
|
(2.7 |
) |
Net cash used in investing activities |
(33.6 |
) |
|
(109.2 |
) |
Cash flows
from financing activities: |
|
|
|
Borrowings under revolving credit facility |
616.2 |
|
|
831.9 |
|
Repayments under revolving credit facility |
(731.7 |
) |
|
(659.0 |
) |
Payments of financing costs |
(1.8 |
) |
|
(1.3 |
) |
Payments on capital leases |
(1.0 |
) |
|
(1.2 |
) |
Dividends paid |
(8.4 |
) |
|
(7.5 |
) |
Repurchases of common stock |
— |
|
|
(3.5 |
) |
Tax withholdings related to net share settlements of restricted
stock units |
(3.6 |
) |
|
(5.2 |
) |
Excess tax deductions associated with stock-based
compensation |
— |
|
|
2.4 |
|
Increase in book overdrafts |
56.9 |
|
|
12.2 |
|
Net cash (used in) provided by financing activities |
(73.4 |
) |
|
168.8 |
|
Effects of
changes in foreign exchange rates |
(1.6 |
) |
|
1.0 |
|
Change in cash and cash equivalents |
(0.6 |
) |
|
5.5 |
|
Cash and
cash equivalents, beginning of period |
26.4 |
|
|
12.5 |
|
Cash and
cash equivalents, end of period |
$ |
25.8 |
|
|
$ |
18.0 |
|
Supplemental disclosures: |
|
|
|
Cash paid during the period for: |
|
|
|
Income taxes, net |
$ |
10.3 |
|
|
$ |
8.8 |
|
Interest |
$ |
3.1 |
|
|
$ |
1.1 |
|
Non-cash capital lease obligations incurred |
$ |
0.6 |
|
|
$ |
0.2 |
|
Unpaid property and equipment purchases included in accrued
liabilities |
$ |
4.1 |
|
|
$ |
1.5 |
|
|
(1) The
Company adopted ASU 2016-09, Compensation - Stock Compensation:
Topic 718: Improvements to Employee Share-Based Payment Accounting,
as of January 1, 2017. As a result of the adoption, excess
tax benefits are included in operating activities rather than in
financing activities. |
CORE-MARK HOLDING COMPANY, INC. AND
SUBSIDIARIESRECONCILIATION OF DILUTED EARNINGS PER SHARE
(U.S. GAAP) TO DILUTED EARNINGS PER SHAREEXCLUDING LIFO EXPENSE
(NON-GAAP) ANDSUPPLEMENTAL SCHEDULE FOR ITEMS IMPACTING DILUTED
EPS(In millions, except per share data)(Unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 (a)(b) |
|
2016 (a)(b) |
|
% Change |
|
2017 (a)(b) |
|
2016 (a)(b) |
|
% Change |
Net income |
$ |
6.9 |
|
|
$ |
16.3 |
|
|
(57.7 |
%) |
|
$ |
9.0 |
|
|
$ |
22.0 |
|
|
(59.1 |
%) |
Diluted shares |
46.4 |
|
|
46.5 |
|
|
|
|
46.4 |
|
|
46.5 |
|
|
|
Diluted EPS |
$ |
0.15 |
|
|
$ |
0.35 |
|
|
(57.1 |
%) |
|
$ |
0.20 |
|
|
$ |
0.47 |
|
|
(57.4 |
%) |
LIFO expense |
0.06 |
|
|
0.04 |
|
|
|
|
0.12 |
|
|
0.08 |
|
|
|
Diluted EPS excluding LIFO expense (Non-GAAP) |
$ |
0.21 |
|
|
$ |
0.39 |
|
|
(46.2 |
%) |
|
$ |
0.32 |
|
|
$ |
0.55 |
|
|
(41.8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Items Impacting Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
Cigarette inventory holding gains (1) |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
|
|
$ |
0.10 |
|
|
$ |
0.11 |
|
|
|
Business expansion and integration costs (2) |
(0.03 |
) |
|
(0.01 |
) |
|
|
|
(0.05 |
) |
|
(0.04 |
) |
|
|
Legacy legal settlement (3) |
— |
|
|
— |
|
|
|
|
— |
|
|
0.03 |
|
|
|
Foreign exchange gains (4) |
0.01 |
|
|
— |
|
|
|
|
0.02 |
|
|
0.01 |
|
|
|
Net OTP tax items (5) |
0.01 |
|
|
— |
|
|
|
|
0.01 |
|
|
— |
|
|
|
Tax Items (6) |
— |
|
|
— |
|
|
|
|
0.03 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Amounts and percentages have been rounded for presentation purposes
and might differ from unrounded results. Diluted EPS and
Diluted EPS excluding LIFO expense (Non-GAAP) are calculated based
on unrounded actual amounts.(b) The per share impacts of the above
items were calculated using a tax rate of 38.8% for the three and
six months ended June 30, 2017, versus 38.2% for the same periods
in 2016. |
(1) Cigarette inventory holding gains |
Cigarette inventory holding gains were $0.9 million
and $7.5 million for the three and six months ended June 30, 2017,
respectively, versus $7.0 and $8.0 million for the three and six
months ended June 30, 2016. |
(2) Business expansion and integration costs |
During the three and six months ended June 30, 2017,
the Company incurred approximately $2.4 million and $3.6 million,
respectively, in identifiable business and integration
expenses due primarily to the onboarding of Walmart and acquisition
of Farner-Bocken Company. The Company had incurred approximately
$0.8 million in business integration costs for three months ended
June 30, 2016 and approximately $2.8 million for six months ended
June 30, 2016 related to the acquisition of Pine State and
onboarding of Murphy U.S.A. |
(3) Legacy legal settlement |
During the six months ended June 30, 2016, the Company
recorded a gain of $2.0 million, net of legal costs, related to the
settlement of a legal proceeding with Sonitrol Corporation. |
(4) Foreign exchange gains |
During the three and six months ended June 30, 2017,
the Company recognized foreign exchange transaction gains of $1.1
and $1.7 million, respectively. The Company recognized
foreign exchange transaction gains of $0.4 million for the six
months ended June 30, 2016. |
(5) Net OTP tax items |
During the three and six months ended June 30, 2017,
the Company recognized other tobacco products tax items, net of
fees, of $1.0 million related to prior years' taxes. |
(6) Tax items |
During the six months ended June 30, 2017, the Company
recognized an income tax benefit of $1.5 million related to the
excess tax benefit from share-based award payments under ASU
2016-09, which the Company adopted in the first quarter of
2017. |
Contact: Ms. Milton Gray Draper, Director of Investor Relations, 650-589-9445 x 3027 or at mdraper@core-mark.com
Core Mark (NASDAQ:CORE)
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