South San Francisco, California, November 9, 2007 – Core-Mark Holding Company, Inc., one of the leading broad-line distributors in the United States, announced financial results for the third quarter ended September 30, 2007.
Net income for the third quarter of 2007 was $3.3 million, or $0.30 per diluted share, compared with $4.4 million, or $0.40 per diluted share, for the same period in 2006. The third quarter of 2007 includes a pre-tax $5.2 million bad debt charge related to two customers. For the first nine months of 2007, net income was $19.0 million, or $1.69 per diluted share, compared with $13.0 million, or $1.19 per diluted share for the first nine months of 2006. In addition to the bad debt charge, year-to-date earnings also include a pre-tax $13.3 million tax refund and other items. Attached is a table that includes these and other items which affect comparability for both periods.
“I am pleased with the overall quality of the earnings for the quarter despite the incremental charge for bad debts that we had to absorb. Our remaining gross profit continues to increase as a result of our marketing strategies,” said Michael Walsh, President and Chief Executive Officer of Core-Mark.
Net sales approximated $1.48 billion for the third quarters of both 2007 and 2006. Early September marked the one year anniversary of the implementation of a decision by a major Canadian cigarette manufacturer, Imperial Tobacco, to start to deliver its products directly to retail stores. The Company grew other sales 4.9% this quarter which offset the lost ncremental sales of $72.8 million attributable to Imperial’s actions. In addition to the loss of the Imperial volume, cigarette carton sales were down 2.8% which is below a reported national decline of 3% to 4% according to one U.S. manufacturer. The Company believes that declining cigarette consumption will require the industry to recapture profits from other categories. Non-cigarette sales improved 8.2% over last year’s third quarter, as the Company’s marketing initiatives continued to gain momentum in higher margin categories. For the first nine months of 2007, net sales increased 4.5% to approximately $4.2 billion compared with approximately $4.0 billion for the first nine months of 2006.
“While sales will be below our expectations for the second half of 2007, revenue growth in 2008 should be solid with recently secured customer gains that will commence in early 2008 in addition to our expansion into Toronto,” said Mr. Walsh.