Core-Mark has recorded record first quarter sales on $3 billion for 2016.

Core-Mark Holding Co. Inc. has announced financial results for the first quarter ending March 31, 2016. The company has experienced substantial growth in the recent quarter, and is expected to encounter year-long growth.

“I am very pleased with our organization’s ability to roll out service to so many new stores and post record sales growth to start the year. We are very excited with the partnerships we have formed with our new valued customers. Core-Mark is positioned for a year of strong financial results as we leverage our growing market share, strategically invest in our infrastructure and benefit from our recently announced agreement with Pine State Trading Co.,” said Thomas Perkins, president and CEO.

First Quarter Results
Net sales increased 22.8% to $3 billion for the first quarter of 2016, compared to $2.5 billion for the same period in 2015, driven primarily by sales to Murphy USA, which the company began servicing during the quarter, and other recent market share wins. Excluding the impact of foreign currency fluctuations and one additional selling day, net sales increased approximately 22%. Cigarette sales increased 28.5%, driven by an increase in cigarette carton sales, attributable primarily to market share gains. Non-cigarette sales increased 11.1% through the successful implementation of core marketing strategies to new and existing customers, and through market share gains. Cigarettes as a percentage of total sales were 70.2% for the first quarter this year compared to 67.1% for the same period last year, the increase was driven largely by sales to Murphy USA.

Gross profit increased 10.1% to $151.1 million for the first quarter of 2016 compared to $137.3 million for the same period in 2015. Remaining gross profit increased 11.4% to $153.5 million from $137.8 million for the same period in 2015.

Remaining gross profit margin for the first quarter of 2016 declined approximately 50 basis points to 5.1% from 5.6% for the same period last year. This decline was due primarily to the addition of Murphy USA and other market share gains which have a higher sales mix of cigarettes and tobacco products compared to most other customers.

The company’s operating expenses for the first quarter of 2016 were $141.9 million compared to $127.4 million for the same period in 2015. Operating expenses as a percentage of net sales were 4.7% for the first quarter of 2016 compared to 5.2% for the first quarter of 2015. The shift in sales mix towards cigarettes in the first quarter this year reduced operating expenses as a percent of sales by approximately 40 basis points. Operating expenses for the first quarter of 2016 include approximately $1.9 million of customer onboarding and business expansion costs offset by a $2.0 million benefit related to the settlement of a legacy legal proceeding.

Net income for the first quarter of 2016 was $5.7 million compared to $5.5 million for the same period in 2015. Adjusted EBITDA increased 5.2% to $24.1 million for the first quarter of 2016 compared to $22.9 million for the first quarter of 2015.

Diluted earnings per share were 24 cents for both the first quarter of 2016 and 2015. Excluding LIFO expenses, diluted EPS were 33 cents for the first quarter of 2016 compared to 30 cents for the first quarter of 2015. In addition, per share results were impacted by several other items, which are provided in the attached diluted EPS table following the financial schedules.

Dividend
Core-Mark has also announced that its Board of Directors has approved a 16 cent cash dividend per common share. The dividend is payable on June 15, 2016 to stockholders of record as of the close of business on May 25, 2016.

Guidance for 2016
The company reiterated its net sales, diluted EPS and Adjusted EBITDA guidance for the full year of 2016. However, management expects to update guidance subsequent to the closing of the Pine State acquisition, which is subject to regulatory approvals and other standard closing conditions.

For 2016, sales are expected to be between $13.4 billion and $13.8 billion and Adjusted EBITDA is expected to be between $153 million and $160 million. The company expects that diluted EPS for the full year will be between $2.26 to $2.41, and diluted EPS, excluding LIFO expense will be $2.60 to $2.75. Key EPS assumptions remain unchanged and include $13 million of LIFO expense, a 38.5% tax rate and 23.4 million fully diluted shares outstanding.

The company also reaffirmed capital expenditure estimates for 2016 of approximately $50 million, which will be utilized for expansion projects, including a new warehouse in Las Vegas, and maintenance investments.

Conference Call and Webcast Information
Core-Mark hosted an earnings call on Tuesday, May 10, 2016 at 9 a.m. Pacific Time during hich management reviewed the results of the first quarter of 2016. The call was also accessible on the company’s website.

An audio replay will be available for approximately one month following the call by dialing 1-888-843-7419 using the code 42409293. The replay will also be available via webcast at www.core-mark.com for approximately 90 days following the call.