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Core-Mark Announces Fourth Quarter and Full Year 2013 Financial Results
- Record Annual Sales of
$9.8 Billion - Record Adjusted EBITDA in 2013 and 23% growth in Diluted EPS for the Year
- Fourth Quarter Non-Cigarette Sales Growth over 18% driving Adjusted EBITDA up 22%
- Expect Sales of
$10.4 to$10.7 Billion & Adjusted EBITDA of$116 to$120 Million in 2014
"We had a very good year in 2013. Our core strategies are resonating in the market place, and we have been able to accelerate our sales growth as a result," said
Fourth Quarter
Net sales increased 13.8% to
Gross profit for the fourth quarter of 2013 was
RECONCILIATION OF GROSS PROFIT TO REMAINING GROSS PROFIT | |||||||||||
(Unaudited and $ in millions) | |||||||||||
For the Three Months Ended |
|||||||||||
2013 | 2012 | % Change | |||||||||
Gross profit | $ | 143.3 | $ | 121.9 | 17.6 | % | |||||
Cigarette inventory holding gains | (4.1 | ) | (3.3 | ) | |||||||
LIFO (income) expense | (0.1 | ) | 1.3 | ||||||||
Remaining gross profit | $ | 139.1 | $ | 119.9 | 16.0 | % | |||||
The Company's operating expenses for the fourth quarter of 2013 were
Net income for the fourth quarter of 2013 was
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||||||||
(Unaudited and $ in millions) | ||||||||||
For the Three Months Ended |
||||||||||
2013 | 2012 | % Change | ||||||||
Net income | $ | 15.0 | $ | 9.7 | 54.6 | % | ||||
Interest expense, net (1) | 0.5 | 0.5 | ||||||||
Provision for income taxes | 8.2 | 6.0 | ||||||||
Depreciation & amortization | 7.0 | 6.3 | ||||||||
LIFO (income) expense | (0.1 | ) | 1.3 | |||||||
Stock-based compensation expense | 0.6 | 1.7 | ||||||||
Foreign currency transaction losses, net | 0.1 | 0.1 | ||||||||
Adjusted EBITDA | $ | 31.3 | $ | 25.6 | 22.3 | % | ||||
Note (1): Interest expense, net, is reported net of interest income. | ||||||||||
Diluted earnings per-share were
2013 Results
Net sales were
Gross profit for 2013 was
RECONCILIATION OF GROSS PROFIT TO REMAINING GROSS PROFIT | |||||||||||
(Unaudited and $ in millions) | |||||||||||
For the Twelve Months Ended |
|||||||||||
2013 | 2012 | % Change | |||||||||
Gross profit | $ | 537.1 | $ | 476.8 | 12.6 | % | |||||
Cigarette inventory holding gains | (9.0 | ) | (7.8 | ) | |||||||
LIFO expense | 8.7 | 12.3 | |||||||||
Remaining gross profit | $ | 536.8 | $ | 481.3 | 11.5 | % | |||||
The Company's operating expenses for 2013 increased to
Net income in 2013 was
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | |||||||||
(Unaudited and $ in millions) | |||||||||
For the Twelve Months Ended |
|||||||||
2013 | 2012 | % Change | |||||||
Net income | $ | 41.6 | $ | 33.9 | 22.7 | % | |||
Interest expense, net (1) | 2.2 | 1.8 | |||||||
Provision for income taxes | 24.4 | 21.5 | |||||||
Depreciation & amortization | 27.2 | 25.3 | |||||||
LIFO expense | 8.7 | 12.3 | |||||||
Stock-based compensation expense | 4.6 | 5.8 | |||||||
Foreign currency transaction losses, net | 0.8 | 0.2 | |||||||
Adjusted EBITDA(2) | $ | 109.5 | $ | 100.8 | 8.6 | % | |||
Note (1): Interest expense, net, is reported net of interest income. | |||||||||
Note (2): Excluding business expansion & integration costs, Adjusted EBITDA was |
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Diluted earnings per-share were
Guidance for 2014
The Company expects annual net sales in 2014 to be between
Adjusted EBITDA for 2014 is expected to be between
Capital expenditures for 2014 are expected to be approximately
Conference Call and Webcast Information
An audio replay will be available for approximately one month following the call by dialing 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.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures including adjusted diluted earnings per share, diluted earnings per share excluding LIFO expense, adjusted EBITDA, and remaining gross profit. We believe these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitates a meaningful period to period evaluation. Management uses 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 a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. 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. These statements include statements regarding our guidance for 2014 net sales, adjusted EBITDA, diluted earnings per share, 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 future results, performance or developments to differ materially from 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, challenging economic conditions; 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; gasoline and other price increases; 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 claims and manufacturer recalls of products; unexpected outcomes in legal proceedings; our ability to achieve the expected benefits of implementation of marketing initiatives; failure or disruptions of our
information technology systems; our dependence on our senior management; shortages of qualified labor; attempts by unions to organize our employees; 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; competition from sales of illicit and other low priced sales of cigarettes; changes in the funding of our pension plans; reduction in the payment of dividends; currency exchange rate fluctuations; our ability to borrow additional capital; changes to accounting rules or regulations; compliance with governmental regulations; and earthquake and natural disaster damage. Refer to the "Risk Factors" section of our Annual Report on Form 10-K for the year ended
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(In millions, except share data) | ||||||||||
(Unaudited) | ||||||||||
2013 | 2012 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 11.0 | $ | 19.1 | ||||||
Restricted cash | 12.1 | 10.9 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of |
235.4 | 228.1 | ||||||||
Other receivables, net | 59.0 | 53.8 | ||||||||
Inventories, net | 389.2 | 366.4 | ||||||||
Deposits and prepayments | 53.0 | 40.3 | ||||||||
Deferred income taxes | 5.4 | 8.2 | ||||||||
Total current assets | 765.1 | 726.8 | ||||||||
Property and equipment, net | 114.9 | 114.7 | ||||||||
Goodwill | 22.9 | 22.8 | ||||||||
Other intangible assets, net | 20.8 | 21.4 | ||||||||
Other non-current assets, net | 33.1 | 33.5 | ||||||||
Total assets | $ | 956.8 | $ | 919.2 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 109.3 | $ | 94.4 | ||||||
Book overdrafts | 22.9 | 24.7 | ||||||||
Cigarette and tobacco taxes payable | 182.5 | 165.6 | ||||||||
Accrued liabilities | 88.1 | 79.5 | ||||||||
Deferred income taxes | 3.1 | 3.4 | ||||||||
Total current liabilities | 405.9 | 367.6 | ||||||||
Long-term debt | 57.6 | 84.7 | ||||||||
Deferred income taxes | 13.4 | 11.7 | ||||||||
Other long-term liabilities | 12.5 | 12.1 | ||||||||
Claims liabilities, net | 28.2 | 28.1 | ||||||||
Pension liabilities | 5.2 | 14.8 | ||||||||
Total liabilities | 522.8 | 519.0 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders' equity: | ||||||||||
Common stock, |
0.1 | 0.1 | ||||||||
Additional paid-in capital | 254.7 | 249.2 | ||||||||
Treasury stock at cost (1,288,704 and 1,156,577 shares of common stock at |
(44.6 | ) | (37.4 | ) | ||||||
Retained earnings | 229.5 | 194.9 | ||||||||
Accumulated other comprehensive loss | (5.7 | ) | (6.6 | ) | ||||||
Total stockholders' equity | 434.0 | 400.2 | ||||||||
Total liabilities and stockholders' equity | $ | 956.8 | $ | 919.2 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(In millions, except per share data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended |
Twelve Months Ended |
|||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
Net sales | $ | 2,491.3 | $ | 2,189.5 | $ | 9,767.6 | $ | 8,892.4 | ||||||||||
Cost of goods sold | 2,348.0 | 2,067.6 | 9,230.5 | 8,415.6 | ||||||||||||||
Gross profit | 143.3 | 121.9 | 537.1 | 476.8 | ||||||||||||||
Warehousing and distribution expenses | 77.2 | 64.7 | 297.1 | 262.7 | ||||||||||||||
Selling, general and administrative expenses | 41.6 | 40.3 | 168.3 | 153.7 | ||||||||||||||
Amortization of intangible assets | 0.7 | 0.6 | 2.7 | 3.0 | ||||||||||||||
Total operating expenses | 119.5 | 105.6 | 468.1 | 419.4 | ||||||||||||||
Income from operations | 23.8 | 16.3 | 69.0 | 57.4 | ||||||||||||||
Interest expense | (0.6 | ) | (0.6 | ) | (2.7 | ) | (2.2 | ) | ||||||||||
Interest income | 0.1 | 0.1 | 0.5 | 0.4 | ||||||||||||||
Foreign currency transaction losses, net | (0.1 | ) | (0.1 | ) | (0.8 | ) | (0.2 | ) | ||||||||||
Income before income taxes | 23.2 | 15.7 | 66.0 | 55.4 | ||||||||||||||
Provision for income taxes | (8.2 | ) | (6.0 | ) | (24.4 | ) | (21.5 | ) | ||||||||||
Net income | $ | 15.0 | $ | 9.7 | $ | 41.6 | $ | 33.9 | ||||||||||
Basic net income per common share (1) | $ | 1.30 | $ | 0.84 | $ | 3.62 | $ | 2.96 | ||||||||||
Diluted net income per common share (1) | $ | 1.29 | $ | 0.83 | $ | 3.58 | $ | 2.91 | ||||||||||
Basic weighted-average shares | 11.5 | 11.5 | 11.5 | 11.5 | ||||||||||||||
Diluted weighted-average shares | 11.6 | 11.7 | 11.6 | 11.6 | ||||||||||||||
Dividends declared and paid per common share (2) | $ | 0.22 | $ | 0.38 | $ | 0.61 | $ | 0.89 | ||||||||||
(1): Basic and diluted earnings per share are calculated based on unrounded actual amounts. | ||||||||||||||||||
(2): In lieu of the first quarter 2013 dividend, the Board of Directors declared an accelerated cash dividend of |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In millions) | |||||||||||
(Unaudited) | |||||||||||
Year Ended |
|||||||||||
2013 | 2012 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 41.6 | $ | 33.9 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
LIFO and inventory provisions | 8.7 | 12.1 | |||||||||
Amortization of debt issuance costs | 0.4 | 0.4 | |||||||||
Stock-based compensation expense | 4.6 | 5.8 | |||||||||
Bad debt expense, net | 1.1 | 2.0 | |||||||||
Depreciation and amortization | 27.2 | 25.3 | |||||||||
Foreign currency transaction losses, net | 0.8 | 0.2 | |||||||||
Deferred income taxes | 5.0 | 0.9 | |||||||||
Curtailment gain | (0.9 | ) | - | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | (9.6 | ) | 7.1 | ||||||||
Other receivables, net | (5.6 | ) | (10.6 | ) | |||||||
Inventories, net | (35.4 | ) | 5.3 | ||||||||
Deposits, prepayments and other non-current assets | (18.6 | ) | 3.9 | ||||||||
Accounts payable | 16.0 | 0.6 | |||||||||
Cigarette and tobacco taxes payable | 19.9 | (10.3 | ) | ||||||||
Pension, claims, accrued and other long-term liabilities | 3.9 | (5.4 | ) | ||||||||
Net cash provided by operating activities | 59.1 | 71.2 | |||||||||
Cash flows from investing activities: | |||||||||||
Change in restricted cash | (2.0 | ) | 2.0 | ||||||||
Acquisition of business, net of cash acquired | (3.6 | ) | (34.0 | ) | |||||||
Additions to property and equipment, net | (18.0 | ) | (28.4 | ) | |||||||
Capitalization of software | (0.4 | ) | (0.2 | ) | |||||||
Net cash used in investing activities | (24.0 | ) | (60.6 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Borrowings (repayments) under revolving credit facility, net | (27.0 | ) | 11.3 | ||||||||
Payments of capital leases | (1.0 | ) | - | ||||||||
Payments of financing costs | (0.3 | ) | - | ||||||||
Dividends paid | (7.1 | ) | (10.3 | ) | |||||||
Repurchases of common stock | (7.2 | ) | (5.2 | ) | |||||||
Proceeds from exercise of common stock options and warrants | 2.4 | 3.8 | |||||||||
Tax withholdings related to net share settlements of restricted stock units | (3.6 | ) | (2.0 | ) | |||||||
Excess tax deductions associated with stock-based compensation | 2.1 | 1.1 | |||||||||
Decrease in book overdrafts | (1.8 | ) | (4.8 | ) | |||||||
Net cash (used in) provided by financing activities | (43.5 | ) | (6.1 | ) | |||||||
Effects of changes in foreign exchange rates | 0.3 | (0.6 | ) | ||||||||
Increase (decrease) in cash and cash equivalents | (8.1 | ) | 3.9 | ||||||||
Cash and cash equivalents, beginning of period | 19.1 | 15.2 | |||||||||
Cash and cash equivalents, end of period | $ | 11.0 | $ | 19.1 | |||||||
Supplemental disclosures: | |||||||||||
Cash paid during the period for: | |||||||||||
Income taxes paid, net of refunds | $ | 19.5 | $ | 11.7 | |||||||
Interest paid | 1.5 | 1.6 | |||||||||
Non-cash capital lease obligations incurred | $ | 1.2 | $ | 11.4 | |||||||
Unpaid property and equipment purchases included in accrued liabilities | $ | 1.9 | $ | - | |||||||
Non-cash indemnification holdback | $ | - | $ | 4.0 | |||||||
Contingent consideration related to acquisition of business | $ | - | $ | 0.6 | |||||||
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS | |||||||||||||||||||||||
(In millions, except per share data) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Three Months Ended |
Twelve Months Ended |
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2013 (a) | 2012 (a) | % Increase | 2013 (a) | 2012 (a) | % Increase | ||||||||||||||||||
Net income | $ | 15.0 | $ | 9.7 | 54.6 | % | $ | 41.6 | $ | 33.9 | 22.7 | % | |||||||||||
Diluted shares | 11.6 | 11.7 | 11.6 | 11.6 | |||||||||||||||||||
Diluted EPS | $ | 1.29 | $ | 0.83 | 55.4 | % | $ | 3.58 | $ | 2.91 | 23.0 | % | |||||||||||
LIFO (income) expense | (0.01 | ) | 0.07 | 0.46 | 0.64 | ||||||||||||||||||
Diluted EPS excluding LIFO (income) expense | $ | 1.28 | $ | 0.90 | 42.2 | % | $ | 4.04 | $ | 3.55 | 13.8 | % | |||||||||||
Cigarette inventory holding gains (1) | (0.22 | ) | (0.17 | ) | (0.48 | ) | (0.41 | ) | |||||||||||||||
Legacy insurance claims (2) | - | - | - | (0.09 | ) | ||||||||||||||||||
Business expansion and integration costs (3) | 0.06 | 0.09 | 0.15 | 0.09 | |||||||||||||||||||
Foreign exchange losses | 0.01 | 0.01 | 0.04 | 0.01 | |||||||||||||||||||
Tax items (4) | (0.04 | ) | - | (0.08 | ) | (0.04 | ) | ||||||||||||||||
Adjusted diluted EPS (5) | $ | 1.09 | $ | 0.83 | 31.3 | % | $ | 3.67 | $ | 3.11 | 18.0 | % | |||||||||||
(a) Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results. | |||||||||||||||||||||||
(1) Cigarette inventory holding gainsCigarette inventory holding gains were |
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(2) Legacy insurance claimsDuring the twelve months ended |
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(3) Business expansion and integration costs During the three months ended |
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(4) Tax ItemThe provision for income taxes for both the three and twelve months ended |
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(5) Adjusted diluted EPSThe adjusted diluted earnings per share impacts of the above items were calculated using a tax rate of approximately 38.6% and 39.4% for the three and twelve months ended |
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Source:
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