 Second Quarter Net Sales decreased 1.7 to 4.26 Billion Reduced operating expenses by 10.8 to 187.7 Million Net Income of 16.9 Million, Diluted EPS at 0.38 per share Adjusted EBITDA of 52.5 Million1 versus 53.5 Million Last Year Announced 0.12 Dividend Payable September 18, 2020 Provides Updated Guidance for Full Year 2020WESTLAKE, Texas, Aug. 06, 2020 GLOBE NEWSWIRE -- Core-Mark Holding Company, Inc. NASDAQ: CORE the Company, one of the largest marketers of fresh, food and broad-line supply solutions to the convenience retail industry in North America, announced financial results for the second quarter ended June 30, 2020.I want to thank our employees, our customers and our vendors for their continued commitment, cooperation and support in what remains a very dynamic environment, said Scott E. McPherson, President and Chief Executive Officer. I am proud of what the Company has accomplished this quarter of largely offsetting the impact of sales and margin declines resulting from COVID-19 through operational efficiency, cost saving initiatives and strategic execution. While the duration of the impact of the pandemic on our sales and margins is uncertain, our results in the second quarter demonstrate our ability to successfully navigate the challenges ahead. We finished the quarter with strong free cash flow, low debt leverage and solid momentum focused on moving the business forward and positioning the Company to thrive as we emerge from the pandemic.Second Quarter ResultsNet sales in the second quarter of 2020 were 4.26 billion compared to 4.34 billion for the same period in 2019. The decrease in net sales was due primarily to a decline in non-cigarette sales attributable to the impact of COVID-19, which drove significant changes in consumer buying behavior in the second quarter this year. Cigarette sales increased 2.1 driven primarily by manufacturer price increases, and partially offset by a 0.8 decrease in total carton sales. Non-cigarette sales decreased 8.9 due primarily to a decrease in sales to existing customers, with the largest declines in the food and candy categories, partially offset by growth in sales of other tobacco products OTP. Non-cigarette sales decreased to 32.2 of total net sales for the second quarter of 2020 compared to 34.7 for the same period in 2019. Gross profit in the second quarter of 2020 decreased 10.8, or 25.8 million, to 213.1 million from 238.9 million for the same period in 2019, driven primarily by the decrease in foodnon-food sales and margins to existing customers as result of COVID-19. These factors were partially offset by 3.9 million of incremental inventory holding gains in the second quarter of 2020 as compared to the corresponding period in 2019. Remaining gross profit, a non-GAAP financial measure, decreased 11.9 to 213.7 million from 242.5 million.___ Note 1: See below for the Reconciliation of Net Income to Adjusted EBITDA.Gross profit margin for the second quarter was 5.00 of total net sales compared to 5.51 for the same period in 2019. The change in sales mix between cigarettes and non-cigarettes contributed approximately half of the gross profit margin decline. Within the non-cigarette category, gross profit margin for the second quarter declined as a result of a shift in the sales mix toward lower margin items and a decline in margin rate, most notably in alternative nicotine products. Cigarette remaining gross profit margin for the second quarter declined nine basis points due primarily to manufacturer increases in cigarette prices.The following table reconciles gross profit to remaining gross profit, a non-GAAP financial measure, as gross profit is the most comparable financial measure under U.S. GAAP:RECONCILIATION OF GROSS PROFIT U.S. GAAP TO REMAINING GROSS PROFIT NON-GAAP Unaudited and in millions For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Amounts Amounts Change Amounts Amounts Change Gross profit213.1 238.9 10.8 431.5 447.1 3.5 Cigarette inventory holding gains7.7 3.8 16.8 12.6 LIFO expense8.3 7.4 16.1 14.4 Remaining gross profit Non-GAAP213.7 242.5 11.9 430.8 448.9 4.0 The Companys operating expenses decreased 10.8 to 187.7 million from 210.5 million for the same period in 2019. The decrease in operating expenses was due primarily to lower warehousing, distribution and SGA expenses related to the decline in sales, and cost savings initiatives implemented in response to COVID-19. Operating expenses as a percentage of remaining gross profit increased to 87.8 compared to 86.8 for the second quarter of 2019.Net income was 16.9 million for the second quarter of 2020 compared to 17.7 million for the same period in 2019. Adjusted EBITDA, a non-GAAP financial measure, was 52.5 million compared to 53.5 million for the second quarter of 2019.The following table reconciles net income to Adjusted EBITDA, a non-GAAP financial measure, as net income is the most comparable financial measure under U.S. GAAP:RECONCILIATION OF NET INCOME U.S. GAAP TO ADJUSTED EBITDA NON-GAAP Unaudited and in millions For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 Change 2020 2019 Change Net income16.9 17.7 4.5 21.2 19.0 11.6 Interest expense, net12.8 3.2 6.3 6.6 Provision for income taxes5.7 6.5 7.5 7.0 Depreciation and amortization16.7 15.5 32.4 30.9 LIFO expense8.3 7.4 16.1 14.4 Stock-based compensation expense2.1 2.2 4.1 4.1 Foreign currency transaction losses, net 1.0 0.2 1.2 Adjusted EBITDA Non-GAAP52.5 53.5 1.9 87.8 83.2 5.5 ___1 Interest expense, net, is reported net of interest income.Diluted Earnings per Share EPS was 0.38 for both the second quarter of 2020 and 2019. Diluted EPS excluding LIFO expense, a non-GAAP financial measure, was 0.52 compared to 0.50 for the second quarter of 2019. See the attached Supplemental Schedule for Items Impacting Diluted EPS.LIQUIDITY FINANCIAL METRICS Unaudited and in millions June 30, December 31, 2020 2019 Cash and Cash Equivalents108.2 14.1 Long-term Debt301.5 382.1 Cash and Cash Equivalents were 108.2 million as of June 30, 2020 compared with 14.1 million at December 31, 2019. Payment deferrals granted by the excise tax regulatory authority in Canada due to COVID-19 were the primary driver of the increased cash balance as of June 30, 2020 and are expected to be paid in August 2020. The outstanding balance on the Companys revolving credit facility Credit Facility was 225.0 million, with 494.4 million available to borrow as of June 30, 2020. Free cash flow for the first six months of 2020 was approximately 208.3 million, a portion of which was used to fund dividend payments of 11.1 million.DividendCore-Marks Board of Directors has approved a 0.12 cash dividend per common share, or 0.48 on an annualized basis. The dividend is payable on September 18, 2020 to stockholders of record as of the close of business on August 21, 2020.Revised 2020 Full Year GuidanceThe Company now expects 2020 net sales to be between 16.5 billion and 16.8 billion. Adjusted EBITDA is now expected to be between 173 million and 183 million. The revised guidance range anticipates carton declines in the 2 to 3 range in the second half of 2020, consistent with recent guidance from the major manufacturers, and continued impact from COVID-19 on non-cigarette sales and margins. The revised guidance also assumes one additional price increase from the cigarette manufacturers over the remainder of 2020 resulting in full year inventory holding gains in the range of 24 to 26 million. The guidance ranges above are based on current expectations and do not contemplate significant changes in the impact of COVID-19 or economic conditions on the Companys business. Diluted EPS for the full year is now expected to be between 0.90 and 1.06. Diluted EPS, excluding LIFO expense, is expected to be between 1.42 and 1.59. Other key assumptions in the revised guidance include 32 million of LIFO expense, a 26 tax rate and 45.3 million fully diluted shares outstanding. The Companys revised guidance assumes no new acquisitions or large customer market share gains. In addition, capital expenditures for 2020 are expected to be approximately 35 million, which will be used for recurring maintenance projects, upgrading certain distribution facilities and the relocation of one distribution facility. Conference Call and Webcast InformationCore-Mark will host an earnings call on Thursday, August 6, 2020 at 8:00 a.m. Central time during which management will review the results of the second quarter of 2020. The call may be accessed by dialing 1-800-588-4973 using the code 49854920. The call may also be listened to on the Companys website at audio replay will be available for approximately one month following the call by dialing 1-888-843-7419 using the same code provided above. The replay will also be available via webcast at for approximately 90 days following the call.Core-Mark Core-Mark is one of the largest marketers of fresh, food and broad-line supply solutions to the convenience retail industry in North America. Founded in 1888, Core-Mark offers a full range of products, marketing programs and technology solutions to approximately 40,000 customer locations in the U.S. 