Core-Mark expands its presence in the Southeast; builds momentum for 2012.
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 third quarter ended Sept. 30, 2011.
Third Quarter Net sales increased 11.6% to $2.23 billion for the third quarter of 2011 compared to $1.99 billion for the same period in 2010. On a constant currency basis, net sales increased 10.6%.
The largest contributor to this growth was sales generated from the Company’s acquisition of Forrest City Grocery Co. in May 2011. In addition, net sales increased due to cigarette price increases, business generated from a new Alimentation Couche-Tard contract and the acquisition of Finkle Distributors Inc. (FDI) in August 2010.
As a result of the FCGC acquisition and the new Couche-Tard business, the company has two new divisions in the Southeast, which are expected to increase sales significantly.
Gross profit for the third quarter of 2011 was $122.2 million compared to $106.1 million for the same period last year. Remaining gross profit increased 11.1% to $121.1 million this quarter from $109.0 million in the third quarter of 2010. Non-cigarette remaining gross profit increased 9.4% or $6.9 million. Cigarette remaining gross profit per carton increased six cents.
Net income for the third quarter of 2011 was $12.0 million, or $1.03 per diluted share, compared to $8.7 million, or $0.78 per diluted share, for the same period in 2010.
“We are pleased with our earnings growth and with the momentum we have created over the last year. We expect to have a good year and an even better one in 2012,” said Michael Walsh, president and CEO of Core-Mark.
First Nine Months of 2011
Net sales were $5.99 billion for the first nine months of 2011 compared to $5.41 billion for the same period in 2010, a 10.7% increase. On a constant currency basis, net sales increased 9.7% during the first nine months of 2011 compared to the same period in the prior year. The increase in sales was driven primarily by the acquisition of FCGC and FDI. In addition, net sales increased due to inflation in both excise taxes and cigarette products and growth in the food category.
Gross profit for the first nine months of 2011 was $324.3 million compared to $291.0 million for the same period last year. Remaining gross profit increased 10.2% to $325.3 million in the first nine months of 2011 compared to $295.2 million in 2010. Non-cigarette remaining gross profit increased 9.7% or $19.6 million. Cigarette remaining gross profit per carton increased five cents.
The company’s operating expenses for the first nine months of 2011 increased to $287.3 million compared to $262.3 million in the same period of 2010. As a percent to net sales, operating costs decreased five basis points. The first nine months of 2011 included a $3.0 million increase in net fuel costs and a $2.0 million net increase in acquisition-related expenses and start-up costs from our new division in Florida.
Net income for the first nine months of 2011 was $21.0 million, or $1.78 per diluted share compared to $16.8 million, or $1.47 per diluted share for the same period in 2010.
Guidance for 2011
The company reiterates its annual net sales guidance of $8.2 billion for 2011, including expected sales from its Forrest City Grocery Co. acquisition and its recently announced new business with Alimentation Couche-Tard in the Southeastern U.S. Management continues to estimate that its capital expenditures will not exceed $24 million in 2011, including the capital necessary to fund its new Florida division.