Core-Mark Holding Co. Inc., 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 first quarter ended March 31, 2014.
“I am pleased with our results which were in line with our expectations,” said Thomas Perkins, president and CEO. “Our first quarter non-cigarette same store sales growth of 6.7% once again reflects the continued success of our core strategies and how they are resonating in the market place.”
Net sales increased 7.2% to $2.3 billion for the first quarter of 2014 compared to $2.1 billion for the same period in 2013. Excluding the impact of foreign currency fluctuations, net sales increased 8.4%.
Non-cigarette sales grew 10.3% while cigarette sales increased 5.8%. The increase in non-cigarette sales was due mostly to the success of our core marketing strategies and market share gains.
Gross profit for the first quarter of 2014 was $124.4 million compared to $116.0 million for the first quarter of 2013. Remaining gross profit increased 7.3% to $126.7 million. Non-cigarette remaining gross profit grew $9.0 million or 10.9% compared to the same quarter last year while cigarette remaining gross profit decreased $0.4 million or 1.1%.
The company’s operating expenses for the first quarter of 2014 were $119.8 million compared to $110.9 million for the same quarter of 2013, reflecting increased costs that supported an approximate 13% increase in cubic feet of product shipped. As a percentage of sales, operating expenses were 5.2% in both periods.
Operating expenses as a percentage of sales were impacted by a sales mix shift toward higher margin non-cigarette products, which have lower selling price points than cigarettes. In addition, operating expenses for the first quarter of 2014 include a $1.6 million increase in employee healthcare costs.
Net income for the first quarter of 2014 was $2.4 million compared to $2.6 million for the same period in 2013. Adjusted EBITDA was $15.9 million for the first quarter of both 2014 and 2013.
Diluted earnings per-share were $0.20 for the first quarter of 2014 compared to $0.22 for the first quarter of 2013. Excluding LIFO expenses, diluted earnings per-share were $0.35 this quarter compared to $0.37 for the first quarter of 2013.
Guidance for 2014
The company reiterates its expectation that annual net sales in 2014 will be between $10.4 billion and $10.7 billion. This growth in sales is driven largely by continued market share gains and assumes no new acquisitions.
The company also continues to expect Adjusted EBITDA to be between $116 million and $120 million. Diluted earnings per-share for the full year, are expected to be between $3.50 and $3.65, which includes an estimate of $13 million for LIFO expense. Our diluted per-share estimates, excluding LIFO expense, are between $4.15 and $4.30. EPS estimates assume a 39% tax rate and 11.7 million fully diluted shares outstanding.
Capital expenditures for 2014 are expected to be approximately $30 million, related to expansion projects and maintenance investments.