Core-Mark Announces Fourth Quarter Diluted EPS of $0.70

Market Wire, March, 2009

Core-Mark Holding Company, Inc. (NASDAQ: CORE), one of the leading wholesale distributors to the convenience retail industry in North America, announced financial results for the fourth quarter and year ended December 31, 2008.

Fourth Quarter

Net sales were $1.49 billion for the fourth quarter of 2008 compared to $1.37 billion for the same period in 2007, an 8.7% increase or 1.9% excluding the Company's new Toronto and New England divisions. Cigarette carton sales increased 6.4% and non-cigarette sales increased 11.3%. Excluding the two new divisions, these categories increased 1.1% and 5.3% respectively.

Gross profit for the fourth quarter of 2008 was $92.9 million compared to $75.3 million for the same period last year. Gross profit, excluding cigarette holding profits, other tobacco products tax refunds and LIFO expense, grew from $78.6 million in the fourth quarter of 2007 to $90.2 million this year, a 14.8% increase. This improvement was driven primarily by incremental gross profit generated by the two new divisions and a 12.6% increase in the non-cigarette categories from existing divisions.

The Company's operating expenses for the fourth quarter of 2008 increased $11.1 million to $80.8 million compared to $69.7 million in the fourth quarter of 2007. As a percent to sales, warehousing and distribution expenses decreased 20 basis points while selling, general and administrative (SG&A) costs increased 55 basis points. Over 65% of SG&A percentage point increase was related to favorable workers' compensation benefits recorded during the fourth quarter of 2007 and another 43% of the basis point increase was due to many employees not qualifying for bonuses during 2007 as a result of the large bad debt expense incurred and the large 2007 OTP tax refund which was excluded from the results used to determine bonuses.

Net income for the fourth quarter of 2008 was $7.4 million, or $0.70 per diluted share compared to net income of $5.1 million, or $0.46 per diluted share for the same period in 2007. Included in net income for the fourth quarter of 2008 was a pre-tax foreign exchange loss of $3.7 million. In addition, diluted earnings per share were significantly impacted by several items which are reconciled in the attached table. Excluding these items, diluted earnings per share on a non-GAAP basis were $0.64 compared to $0.60 in the fourth quarter of 2007.

"We are pleased with the relative strength of our business and the improvement in our core profits and have great confidence in the competitive position of our 'fresh' offerings," said Michael Walsh, President and Chief Executive Officer of Core-Mark.

Full Year

Net sales were $6.04 billion for 2008 compared to $5.56 billion in 2007, an 8.7% increase or 4.1% excluding the two new divisions. Cigarette carton sales increased 2.2% and non-cigarette sales increased 13.1%. Excluding the two new divisions, cigarette cartons sales decreased 1.0% while non-cigarette sales increased 8.2%.

Gross profit for 2008 was $359.1 million compared to $332.6 million last year. Gross profit, excluding cigarette holding profits, other tobacco product tax refunds, and LIFO expense, grew 12.4% from $325.2 million in 2007 to $365.5 million in 2008. This improvement was driven primarily by incremental gross profit generated by the two new divisions and a 12.1% increase in the non-cigarette categories from existing divisions.

The Company's operating expenses for the year increased $34.1 million to $329.0 million compared to $294.9 million during 2007. Last year's operating expenses included a $5.9 million bad debt charge partially offset by a $3.1 million workers compensation benefit. Excluding these two items, operating expenses increased $36.9 million in 2008 or 19 basis points as a percent to sales. The largest contributors to this increase were health care and workers' compensation costs, bonus expenses for reasons previously stated and operating expenses from the two new divisions.

Net income for 2008 was $17.9 million, or $1.64 per diluted share compared to net income of $24.1 million, or $2.15 per diluted share in 2007. This $0.51 decrease in the diluted earnings per share was significantly impacted by several items which are reconciled in the attached table. Excluding these items, diluted earnings per share on a non-GAAP basis was $2.19 in 2008 compared to $1.87 per diluted share in 2007.

Guidance for 2009

The Company reiterates its annual guidance for 2009 of $6.3 billion of net sales, which is approximately a 4% increase in net sales compared to 2008. This guidance does not include the impact of the recently passed SCHIP legislation. Management continues to expect capital expenditures not to exceed $27 million for 2009.

Annual Meeting

Core-Mark has scheduled its annual meeting for June 2, 2009 at 2:00 p.m. in Burlingame, California at the Hyatt Regency located at 1333 Bayshore Highway. Stockholders of record as of April 6, 2009 will be entitled to vote at the Annual Meeting.