Core Mark Holding Co Inc (CORE, Financial) filed Quarterly Report for the period ended 2010-06-30.
Core Mark Holding Co Inc has a market cap of $320.3 million; its shares were traded at around $30.06 with a P/E ratio of 10.6. Core Mark Holding Co Inc had an annual average earning growth of 3.9% over the past 5 years.CORE is in the portfolios of Arnold Van Den Berg of Century Management, Paul Tudor Jones of The Tudor Group, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
In February 2009, the State Childrens Health Insurance Program (SCHIP) was signed into law, which increased federal cigarette excise taxes levied on manufacturers of cigarettes from 39¢ to $1.01 per pack effective April 1, 2009. In March 2009, most U.S. manufacturers increased their list prices which resulted in an increase of approximately 28% on Core-Marks product purchases in response to the passage of the SCHIP legislation. Net cigarette sales for the six months ended June 30, 2010 include approximately $105.9 million of increased sales from these price increases. Cigarette inventory holding profits were $3.0 million for the six months ended June 30, 2010 compared to cigarette inventory holding profits of $35.2 million, partially offset by a net federal floor stock tax of $11.5 million, for the same period in 2009. The significant cigarette inventory holding profits in 2009 were due primarily to increases in cigarette prices by manufacturers in response to the anticipated increase in federal excise taxes mandated by the SCHIP legislation. As of June 30, 2009, we had included in inventory and accrued liabilities the impact of the federal floor stock tax liability which was due and payable by July 31, 2009. We paid approximately $12.7 million of federal excise floor taxes and received $1.2 million in reimbursements from cigarette and tobacco manufacturers for a net floor stock tax amount of $11.5 million, which was reflected as an increase to our cost of goods sold for the second quarter of 2009.
Gross Profit. Gross profit represents the portion of sales remaining after deducting the cost of goods sold during the period. Vendor incentives, cigarette holding profits, the federal floor stock tax and changes in LIFO reserves are classified as elements of cost of goods sold. Gross profit for the three months ended June 30, 2010 increased by $9.6 million, or 11.0%, to $97.1 million from $87.5 million for the same period in 2009. The second quarter of 2009 includes $11.5 million of federal floor stock tax related to SCHIP.
Operating Expenses. Our operating expenses include costs related to warehousing, distribution, and selling, general and administrative activities. For the three months ended June 30, 2010, operating expenses increased $2.0 million, or 2.5%, to $84.8 million from $82.8 million for the same period in 2009. The increase in operating expenses was driven primarily by a $1.9 million, or 3.9%, increase in warehousing and distribution expenses. As a percentage of total net sales, total operating expenses declined 21 basis points to 4.63% for the three months ended June 30, 2010 compared to 4.84% for the same period in 2009.
Warehousing and Distribution Expenses. Warehousing and distribution expenses increased by $1.9 million, or 3.9%, to $52.1 million for the three months ended June 30, 2010 from $50.2 million for the same period in 2009. The increase in warehousing and distribution expenses was due primarily to an increase in net fuel costs of $1.2 million and higher delivery salaries. The increase in delivery salaries was due primarily to an increase in the number of deliveries from our vendor consolidation and fresh and local initiatives. As a percentage of total net sales, warehousing and distribution expenses were 2.84% for the three months ended June 30, 2010 compared to 2.93% for the same period in 2009.
Selling, General and Administrative (SG&A) Expenses. SG&A expenses increased $0.1 million, or 0.4%, to $32.2 million for the three months ended June 30, 2010 from $32.1 million for the same period in 2009. SG&A expenses for the second quarter of 2010 included the settlement of an insurance claim we inherited from Fleming, our former parent, in the amount of $1.0 million, offset by reductions from cost savings initiatives. As a percentage of total net sales, SG&A expenses were 1.76% for the second quarter of 2010 compared to 1.87% for the same period in 2009, or a decrease of 11 basis points.
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Core Mark Holding Co Inc has a market cap of $320.3 million; its shares were traded at around $30.06 with a P/E ratio of 10.6. Core Mark Holding Co Inc had an annual average earning growth of 3.9% over the past 5 years.CORE is in the portfolios of Arnold Van Den Berg of Century Management, Paul Tudor Jones of The Tudor Group, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Operating income, excluding cigarette holding gains and LIFO expense was $13.5 million for the second quarter of 2010 compared to $17.9 million during the same period in 2009, a decrease of $4.4 million. In addition to the $2.9 million reduction primarily in floor stock gains, we expensed a $1.0 million settlement of a legacy insurance claim and absorbed higher net fuel costs and an increase in healthcare costs.In February 2009, the State Childrens Health Insurance Program (SCHIP) was signed into law, which increased federal cigarette excise taxes levied on manufacturers of cigarettes from 39¢ to $1.01 per pack effective April 1, 2009. In March 2009, most U.S. manufacturers increased their list prices which resulted in an increase of approximately 28% on Core-Marks product purchases in response to the passage of the SCHIP legislation. Net cigarette sales for the six months ended June 30, 2010 include approximately $105.9 million of increased sales from these price increases. Cigarette inventory holding profits were $3.0 million for the six months ended June 30, 2010 compared to cigarette inventory holding profits of $35.2 million, partially offset by a net federal floor stock tax of $11.5 million, for the same period in 2009. The significant cigarette inventory holding profits in 2009 were due primarily to increases in cigarette prices by manufacturers in response to the anticipated increase in federal excise taxes mandated by the SCHIP legislation. As of June 30, 2009, we had included in inventory and accrued liabilities the impact of the federal floor stock tax liability which was due and payable by July 31, 2009. We paid approximately $12.7 million of federal excise floor taxes and received $1.2 million in reimbursements from cigarette and tobacco manufacturers for a net floor stock tax amount of $11.5 million, which was reflected as an increase to our cost of goods sold for the second quarter of 2009.
Gross Profit. Gross profit represents the portion of sales remaining after deducting the cost of goods sold during the period. Vendor incentives, cigarette holding profits, the federal floor stock tax and changes in LIFO reserves are classified as elements of cost of goods sold. Gross profit for the three months ended June 30, 2010 increased by $9.6 million, or 11.0%, to $97.1 million from $87.5 million for the same period in 2009. The second quarter of 2009 includes $11.5 million of federal floor stock tax related to SCHIP.
Operating Expenses. Our operating expenses include costs related to warehousing, distribution, and selling, general and administrative activities. For the three months ended June 30, 2010, operating expenses increased $2.0 million, or 2.5%, to $84.8 million from $82.8 million for the same period in 2009. The increase in operating expenses was driven primarily by a $1.9 million, or 3.9%, increase in warehousing and distribution expenses. As a percentage of total net sales, total operating expenses declined 21 basis points to 4.63% for the three months ended June 30, 2010 compared to 4.84% for the same period in 2009.
Warehousing and Distribution Expenses. Warehousing and distribution expenses increased by $1.9 million, or 3.9%, to $52.1 million for the three months ended June 30, 2010 from $50.2 million for the same period in 2009. The increase in warehousing and distribution expenses was due primarily to an increase in net fuel costs of $1.2 million and higher delivery salaries. The increase in delivery salaries was due primarily to an increase in the number of deliveries from our vendor consolidation and fresh and local initiatives. As a percentage of total net sales, warehousing and distribution expenses were 2.84% for the three months ended June 30, 2010 compared to 2.93% for the same period in 2009.
Selling, General and Administrative (SG&A) Expenses. SG&A expenses increased $0.1 million, or 0.4%, to $32.2 million for the three months ended June 30, 2010 from $32.1 million for the same period in 2009. SG&A expenses for the second quarter of 2010 included the settlement of an insurance claim we inherited from Fleming, our former parent, in the amount of $1.0 million, offset by reductions from cost savings initiatives. As a percentage of total net sales, SG&A expenses were 1.76% for the second quarter of 2010 compared to 1.87% for the same period in 2009, or a decrease of 11 basis points.
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