South San Francisco, California, May 12, 2008 – Core-Mark Holding Company, Inc., one of the leading broad-line distributors in North America, announced financial results for the first quarter ended March 31, 2008.
First Quarter
Net sales were $1.35 billion for the first quarter of 2008 compared to $1.28 billion for the same period in 2007, a 5.4% increase. The increase in sales was accomplished despite a 1.4% decline in cigarette carton sales. Non-cigarette sales grew 11.0% in the first quarter of 2008 compared to the last year’s first quarter.
Gross profit for the first quarter of 2008 was $81.2 million compared to $75.5 million in the first quarter of last year. The first quarter of 2007 included an additional $3.2 million in cigarette holding profits compared to the same period this year. Gross profit, excluding both cigarette holding profits and LIFO expense, grew from $74.0 million in the first quarter of 2007 to $82.8 million, an 11.9% increase. This improvement was driven by our non-cigarette categories due primarily to candy price increases and our marketing initiatives.
The Company’s operating expenses for the first quarter of 2008 increased to $80.5 million from $71.7 million in the first quarter of 2007. A portion of this was due to an increase in employee benefit costs, related primarily to healthcare claims. Also included in this increase are start up costs of $0.7 million and operating expenses related to our new Toronto division.
The first quarter of 2008 resulted in a net loss of $0.5 million or $0.05 per diluted share, compared to net income of $2.1 million, or $0.19 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 $1.0 million this quarter compared to $0.1 million in the first quarter of last year.
“Our core earnings continue to show solid growth, despite a weakening in consumer demand. The start-up of Toronto and the integration of new accounts generated planned one-time expenses, but I am pleased with the roll-outs overall. Our ability to sustain growth in noncigarette gross profits validates that our marketing programs are resonating with our customers, a trend I expect will continue for the foreseeable future,” said Michael Walsh, President and Chief Executive Officer of Core-Mark.
Guidance for 2008
The Company reiterated its estimates that 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 driven primarily by market share gains offset by continued weakness in cigarette carton sales. Capital expenditures are expected to be approximately $20 million for 2008.