CORE - Earnings call transcript Q1 2020

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Operator

Hello, and welcome to the Core-Mark First Quarter 2020 Investor Call. My name is Michelle, and I will be the operator for your conference. [Operator instructions] Please note that this conference is being recorded.

I will now turn the call over to Mr. David Lawrence. begin. may you Sir,

David Lawrence

good McPherson, Today's executive our our Chris and led officer; will by Miller, officer. financial Scott president chief morning you call everyone. be and Thank and chief

morning. to Scott, the turning point Core-Mark we the Private of call release harbor to Securities Act, this take Before in I Litigation the of advantage earnings Reform over out will that provisions the safe intends as filed noted

risks and Please or our to which today are differ include may may implied statements. indicated statements and remember forward-looking uncertainties, materially that comments such those results actual subject from by

of Some report company's on described detail quarterly SEC XX-Q. in these the are risks Form our filings including in

duty update undertake company statements. not The such to does any forward-looking

during this call. Additionally, refer we will measures to financial certain non-GAAP

of useful financial most non-GAAP our find investors, You a measures and related reconciliation measures can comparable earnings directly and Form of quarterly information a these to the discussion consider other report including measure on GAAP our XX-Q. in release we to why these

I'll now to Scott. over the call turn

Scott McPherson

joining us quarter first call. today our on for everyone Thanks

the provide maneuvering I of comments impact through on Core-Mark moment quarter, on I Before a the want to is COVID-XX. to reflect my take how

and February, day I'm their North When health our task the XX,XXX the our Core-Mark customers Ensuring America. servicing family. essential over amazing safety maintain up and allows Core-Mark supply about COVID-XX to of From our across employees family and mantra our the referring force assembled been talking in has the family, priority first chain, we community. to integrity that is make

essential and their have nothing the supply they as a done our short To through of communities and fighting value partners spectacular that and end, have vendor to goods job our demand services daily. been challenges, customers great provide

the COVID-XX, the March sales followed spikes April. with impact month weeks As on company regarding in the certainly faced press late challenges through in declines March by our April our significant sales volume has of we first release indicated XXth of of

outlined modifications also in the to impact to of steps the work material address XXX(k) including an taken our match; these policy to and we've and shortfalls. headwinds our reductions mitigate count We vacation hour effort elimination of volume head

responded, to how the Despite the the health has of I preserve proud disciplined family and company. decisions am the of organization making Core-Mark challenges, the

to strong back and and in bottom-line performed in Circling a X% in February expenses. our line same-store performance leverage perspective, cartons Revenues From XX%, our first year-over-year and categories quarter for were general we down fueled with in EBITDA our grew carton the cigarette approximately results, strong solid we expectations. sales March. driven and by cost transportation the X% continued in in up growth non-cigarette by sales, quarter and with January

and of by regulation Non-cigarette sales also growth showed the quarter disruption COVID-XX. through despite the the late vape March impacts caused solid

Overall, gross expectations slightly to expectation, finished And our year. growing margins below to on related below although quarter profit with non-cigarettes cents-per-carton COVID-XX. Cigarette also margins improved, prior consistent changes finished a mix basis. due the

on declined saw standpoint, general costs From strong an quarter. performance the and year-over-year a leverage Selling, we in administrative basis. expense

personal sick our with effects initial operations by the COVID-XX increases expenses quarter. progress and lower cubes On of cleaning the equipment. saw including route protective impacted the efficiency front, associated in productivity, throughout we was and Warehouse solid transportation increased costs with per time

remaining basis total XXX by with expenses operating gross percentage over points. as In we aggregate, saw of profit down a solid leverage

second update to provide the and I an would around quarter April on company. Moving of in on spirit the downward with XXth impact trends off the the so results far additional sales our quarter like of and the transparency COVID-XX, revenues second margins in the far mitigate to on have our impacts we color thus pressure and seen in the pandemic's Consistent update, our continued on steps continued quarter.

and non-cigarette mix XX%, total relative impacted both in April margins. for tobacco continue The combined a to of in on basis. non-cigarette the higher margins Margins to by and April. approximately caused impact to and the points Cigarette April of were down has margins decline to respectively, sales XX year-over-year be cigarette in basis X% month higher relative total mix range

May. labor head the beginning perspective, declines From in These a most of April employees by count Core-Mark to by were head to X,XXX savings approximately realized response taken early COVID-XX. due with volume reduced early in count actions

We nonexempt minimizing to are reducing cost and overtime achieving savings better employees work hours to reduced volumes. by further of align labor the

reduction focus preserve on continue efforts, liquidity. cost liquidity additional discipline operating provide which in to our Chris will accounts business every our through on and expenditures management, finally, and our color risk inventory capital today's financial pose receivable And performance around to reduced position environment. we particular a a

of the focused the team despite crisis. business forward operating Under complexity the heading moving business the our usual, leadership as remains on during of

for of technology COVID-XX. BI power customer operational for On leveraging analytics backbone our the continuity to business as we intelligence utilization related have the plan our data business, across greatly technology the real-time our and metrics, front, advanced

we From a service business growth and of our customers prepared a our offerings vendors. for and opportunities perspective, relaunch range marketing are to wider sales and our providing SmartStock program,

us customer experience, we allowing And converting retail organizations. our video vast the bring and Excellence meaningful are sales Center increasing finally, productivity finance progress to a We make temporarily leveraging our into to of to and of our value on remotely. the camera continue partners capabilities, virtual

were wholesaler of we with perspective, sizable a opportunities struck. retailers, chain independent growth meaningful along pursuing before number COVID-XX acquisitions a From

We once environment continued have these pipeline maintain have dialogues place business and we believe settles. to a robust the in

forward, hard their initiatives and springboard growth. optimizing as offering working providing Core-Mark a Core-Mark in to for retail customers other our volumes business to and assist return are positioning move We these

can customers to our for communities thank want I the of service want into It's customers the safely closing, will family. In ensure strong efforts. Core-Mark entire by I curves, to again working during stock thank success way this unprecedented with to our in to company providing fought I of have and our our side great accomplish. step channel and who the the vendor that your appreciate working future. far partners every us to side commitment keep your supply proving demand period with and To and a partnerships what

on every quarter we, first based year. But in well world obviously, North America, this results, company health like solid to our had were fight another we finally, unprecedented pandemic. positioned deliver And through have to

we Core-Mark emerge the on quickly steps the its While confident we of duration magnitude to taken and I of right position and and preserve our lead have am the the our certain to cannot be this of crisis impact that to or health business, company industry.

quarter. for on call the the will Chris I additional now color turn to over

Chris Miller

and on Scott off strong balance details covering first morning, performance start I'll taking Thank provide flow good a and everyone. million then quarter with million increased the to you, cash few to first are $X.X through manage actions liquidity the an COVID-XX update in $X.X last by and the we and for crisis. sheet on our compared income our quarter year. our Net

million Excluding last an income the quarter XX% for per to quarter share earnings share Diluted $X.XX the $XX LIFO net quarter. first for expense, over per year. $X.XX, increase increased the of was

diluted $X.XX expense, increased for quarter. Excluding to LIFO the $X.XX EPS

X.X% quarter first increased X.X% of We X% growth February strong quarter and up through nearly sales to cigarette non-cigarette the the sales Total this started sales billion. year-over-year. year with in $X.XX

non-cigarette sales. with saw a non-cigarette in single-digit In and March, months high trending year. March, in the sales the the sales decline in slowdown late first X% cigarettes sales and better over three propelled cigarette In first significant we a by of saw up sales increase weeks volume we of two than growth a

up Excluding about benefit day were the the of this extra up and sales X% non-cigarette sales quarter one for about quarter. first X% cigarette sales were the in year,

the noting In helped quarter, by offset decline. customer lift non-cigarette cigarette merchandise while $XX is quarter strong in short, worth sales the benefit It non-cigarette for in March the late the our were sales of growth in by in cigarette early million ban. benefit March of March growth early returns overall e-cigarette a was that approximately following to sales of the for impacted the flavor flavored sales

per expectations finished at COVID-XX. with caused cigarette XX.XX%, to material increase margins that XX-basis-point XX offset have a remaining profit been gross of line X.X% a of would profit Non-cigarette mix From were below XX price for in margins margin approximately to prior year higher perspective, impact remaining our prior margin negative with by growth margin Adjusting inflation. the gross carton the change driven points by related our profit basis our half expectations but than slightly change non-cigarette above which in mix, year.

debt in saw and we XX% improved compared leverage expenses by remaining a a remaining gross last general mentioned, good as salaries XX.X% As SG&A expenses other including in the percentage to mainly gross expenses bad profit reduction quarter. of operating profit and in bonus driven to expense. year Scott of

points of distribution and by basis related as more a by utilization by Leverage the higher for higher than gross in driven from was expenses and quarter decrease quarter. to resulting other expenses profit increased COVID-XX. productivity Warehouse impacts offset distribution remaining in fleet expenses percentage warehousing a the and XX

in an was sheet. balance of our million impacted incremental crisis facility the quarter at We and build Altria to sales initial temporary million first the and to ended March the credit at to $XXX end turning availability borrow. the on available Now with $XXX drawn facility. closure during of by manufacturing inventory in decision onset of March cigarette strategic the the the a surge The

a mature the until fixed XXXX, below capacity and covenant March of of that credit into total one the have million not Our XX% springs charge our facility. $XXX place we only facility time of availability falls if does under

facility. given one We the are level the threshold the above substantially availability our and XX% excess significant under time

under in price million of credit of short-term second quarter. cigarette of by As approximately build increases the availability manufacturer of was million facility $XXX anticipation a in $XXX May incremental reduced Xst, sometime inventory the was which

to We working customers cash capital actively with vendors and engaging our conversion our minimize and are vigilantly cycle. monitoring

have have that to as majority operate the retailers down shut by otherwise of continue our are impacted significantly businesses, convenience our to of percentage the customers While small been had temporarily more crisis. or a customers essential

to quality with deterioration have working seen a portfolio. mitigate not this of accounts the our material far, group are closely We receivable Thus we exposure. customer in

represent for a us going forward. does this potential However, risk

we've reduced inventory, we're of our the to terms reduced inventory sales the volume with non-cigarette levels align in quarter. second In experiencing

cigarette However, balanced with more approach we're inventory. taking a

from impacted increases major thus have manufacturers the our crisis, by year sales the want in a expect further cigarette in we and see position to earlier, we're price to good to this I April While mentioned cigarette capitalize. COVID-XX been ensure as

for last last first realize increase year, slightly quarter saw up quarter than we February. higher the were in cigarette In of smaller $X.X per carton first slightly in spite from a the the we gains price Our to million, inventory management. quarter what through able first year a $X.XX on holding gains were price increase of strategic

likely strong would come expenses which became When we of cash for and being we initiatives last a significant cash clear reduction business with to it balance facing short-term once out and implementing the to to goal gate able reduce began crisis some were the subsides. conserve time, in savings proactively the

In expenses have including and nonessential addition and have volumes cost our to we also the and taken to preserve travel, expenses. aggressive meetings, other to reduction are prepared liquidity to Scott reduce and mentioned, salary in discretionary eliminated Overall, stopped actions increases align all reduction the needed. and costs reduced profitability hiring or steps to we consulting operating costs additional if to take

our will standpoint, budget fourth plans call. million. for on with of quarter expect million We've the of spent our includes relocation our the expenditures $XX remainder one capital the the our capital capital of facilities and associated expenditures first to $X.X reassessed full-year $XX year distribution of capital This we discussed closer a our now be million quarter. capital From in

April $X.X announced on Also we shares in our we our press being repurchase million balance release to back mindful have approximately XXth after of spending share buy suspended our program sheet, XXX,XXX that to which first on share continuing XX, rate board we has been our payable by dividend of the quarter. That approved in committed XXXX. $X.XX per June remain at cash a said, our

impacts including to cash scenarios cash depth volume liquidity varying loss duration we've the modeled While and it's several erosion perspective, in in forecast and the our a from cycle. related conversion and future difficult of

worsen liquidity, will and capitalize evaluate have While and ensure we sufficient to alternatives capital have opportunities. to we we have conditions various liquidity growth we to adequate in on event currently believe continue the

to of crisis. we the summary, the through strong flexibility In and balance a duration have this sheet manage

share for workforce we've While our in to taken reduce role continue emerge weeks, and positioned from to to we've decisions steps make and recent believe to maintain as right market expenses other profitability. had our an crisis well growth sales, we difficult and industry to drive very leader in the Core-Mark this

questions. for line may open now you Operator, the

Operator

Thank [Operator the Instructions] Ben queue first with you, Inc. sir. comes The from Stephens question in

Your line is proceed. open. Please

Benjamin Bienvenue

morning everyone. Hey good

Scott McPherson

Ben. Good morning,

Benjamin Bienvenue

versus parsing stores out kind has chains as I are evolved ask independent if customer and evolved? that set, at how COVID larger first, to how, has faring across your all, want of the

Scott McPherson

reasonably areas East mean would nature. overall, our probably country. the and Yeah. you outperformed Murphy performed Ben, a there's pretty have their I of done I'd It's on driven geographic independents the clearly, affected say, bit, probably than well. in I have think were on large say, well. Murphy's part independents has standpoint, were And I chain exceptionally the large But little a little call. a held from volume. West our the - Coast more chains central But really have overall, well. by bit

in-store of all I up think period. their we've in this say, them benefited And remained similar store healthy to think I the healthy margins is, fuel have which have from because definitely has them declines I'd whole convenience overall, sales margins propped what despite experienced, fuel customer throughout reasonably

Benjamin Bienvenue

see sense. Okay. share the of question liquidity the to smaller we all Do think into faced kind if financial duress grabs same and that. sort That could the have for that up you market perhaps access you makes distributors of might as weather insight same relates or regional that to you your if Maybe competitors, don't have storm? to it

Scott McPherson

they other of well. But going I on a the that to peers is in lot be think fairly I see weathered on definitely definitely, and independent is independent you're across who and Coast the it of some I've think hotspots geographical. Again, West East regions the are wholesalers. of I in think some country, there wholesalers pressure the of industry that pressure absolutely. in talked couple that to to a going our

Benjamin Bienvenue

you about basis this And then thinking in growth should distribution can question. year? any extent my And color, and much dollar how down on warehouse last the to line do that and would SG&A Great. expenses been what we those expenses how you have all Okay. offer control To be a tamp have items?

Scott McPherson

Sure.

to information our travel anticipate provided. I think with headcount the from I reductions, think, that nonessential entertainment. expense spend can I made standpoint. And as ratcheted represents mean, clearly, all trying as significant we've of were transparent an we Ben, we've and we and what possible be around of clearly you down kind

job both feat. cubes the is of productivity thing levels current have I were The when consistent period, one year, warehouse which pretty we that and rebound though over say, the last load I'd amazing will rightsizing say in to workload. with have to the great we weeks, done And volume organization variation in in a per it's a of, seen last couple we much five-week where is a in have you

need clearly, good about transportation, the we to and So, SG&A, productivity. for the pretty volume feel rebound be successful, well. as I controlling warehouse But maintaining to us

Benjamin Bienvenue

year. the and good the rest navigating Thanks of luck Okay.

Scott McPherson

Ben. Thanks

Operator

question in Jefferies. next queue Mandeville sir. with the Chris Thank The you, comes from

line proceed. open. Please is Your

Chris Mandeville

just start here. the we April Hey. morning could guys. Scott, with off Good maybe trends

look back, I at XX% few you your you as were month. basically to a start down weeks So cited the pre-announcement

Now month out out obviously down it so of the there. at closed of But some whole it X%, to there you element came was looks upside progression strictly cigarettes. like the

what then And could from be guess from of you maybe saw you carton type interested the versus I was performance particularly any rate non-cigarettes? if I pricing. benefit So, I'd able, parse in out hoping the exit you're month in

Scott McPherson

Sure.

non-cigarettes and the in through of duration We range of right, April. the helped being consistent cigarettes were in really the month what the pretty sales month. XX% was down kind end through You're for Clearly, the accelerated the improve of Chris. month of

some as shelter-in-place as That we in those May. first we've week overall the see we've to areas. lift, in in volume seen May of of pick started up the bans a said, the some of improvement saw week company, first really, And

the lift. So restrictions we're some of seen as encouraged by we've that

it cigarettes of like I helped we've the some us through - So positive really, in I I month. trends part was seen the but think - this month, said, first that predominantly

Chris Mandeville

curious, would Easter a maybe guess Okay. And I imagine I holiday wasn't you particularly great then guys. for I'm

impact that basis category non-cigarette way negative of in the well that as the So within that candy declines that XX% any noted? April, points holiday's out of just to about XX is for parsing maybe and the sales as thinking tying gross compression margin there you've

Scott McPherson

say, ton I'd Easter is don't seasonal Really, for we - us candy. a sell of

for It industry. impact we our So overly material than have saw on it's doesn't And the candy April. consistent candy different fairly grocery throughout us. an

So, being our I in don't as holiday Easter space anyway. a big see

Chris Mandeville

a had third C-Store question parse little which a the business then here. bit Ben you performance represents if just non-C-Store I'm Okay. out could your And business to your asked close to but sales. a similar of of to I now different curious think relative

color you those can then that. to give confirm just So how maybe were there And some us two respect segments performing? with

Scott McPherson

Sure.

called we of other you And About we've array like a customers. third, stores. in then convenience we are retail out, got traditional Walmart that there. clearly, have mean, of it's those two-thirds take if I XX,XXX So formats. wide

was We our Aid schools stores and in Primarily that also there. affected about have store off - Both of we - performed nonessential. locations casinos, and it that have being well. by of Rite were were those significantly. base, airport But overall represents XX% their reasonably volume

formats, affected XX% So those of clearly was wide driver of retail really customer were casinos big there. but it the of third ones And airports, were schools, the that were of our a breakout. That but volume kind less than array being business is that down, count. affected the that's different

Chris Mandeville

as we can year, offer? just expense Okay. the there any think And full modeling just on is a the you one about really for Chris, guidance front. interest quick

Chris Miller

Yeah.

have of an I it'd that will level. Chris, the It around think So be be I'd don't on to a say little last the depends number. of increases. I exact kind it cigarette timing we're bit, higher, But price - year comparable

Chris Mandeville

there. leave I'll guys. it right. Thanks All

Scott McPherson

Chris. Thanks

Operator

you. Thank Bobby queue Griffin from The comes next in question with Raymond the James.

proceed. Your is open. line Please

Alessandra Jimenez

you Good Bobby Jimenez Griffin. morning. Thank for Alessandra on our taking question. This is for

of certain remind you more geographic could regions? you us your Do First, in have exposure? weighting

Scott McPherson

is in our broken three regions. So business out

We the kind And states. have Western of region our Texas. volume they is in some They're of then we And Northern same region. region, Northern a and in which have about break kind Eastern an of a Canada size.

toward the and you're And I New biggest markets were California had was say, clearly, coastlines, leading the on areas our impact. around the would York it if most, impacted we where were the that

Alessandra Jimenez

helpful. That's Okay. And from fixed Could cost variable? you what some of the savings of then costs are of your your actions? percentage impact quantify versus some

Scott McPherson

So and gave employees. savings head provided is you million. reduction our we've count I also $X our X,XXX vacation - we which at given XXX(k) were that our

look wages our So at there. you and kind can the estimate average of impact

are When XX% SG&A, When versus I I the to fixed of salaries. I being about think I in salaries expenses think about think about the XX% When warehouse think think more our variable range. about portion to and of XX% range. I the XX% about it variable, those in delivery, about XX% being variable

down discretionary It's other but all our And are of then and is spend. rent travel reducing at we those around cost. is have all you facility - fixed. the budgets, our that category clearly, other expense when of some I mean, definitely, look costs ratcheted But we a building lot largely expenses, and

Alessandra Jimenez

you helpful. forward. of That's luck best right. Thank All and moving

Scott McPherson

you much. very Thank

Chris Miller

you. Thank

Operator

that queue, Kelly in question the We from call proceed. have Bania comes Please BMO one Capital. with and more

Kelly Bania

pipeline of I and morning. forward? the would could wondering about my and you of seeing wins to behind those talk the a some you was mentioned - kind pre-COVID crisis how about if going expect robust I Hi. Thanks are as think ask to business this impact wanted taking what you potential driving for force maybe just questions. I you Good pipeline

Scott McPherson

Sure.

up when like store largely I because think, those Clearly, do those in the customer the think were conversations some dialogues. store have been customers as of wins of of health extent. Kelly, that button preserved most quickly hit with to to COVID-XX I hit, And store pipeline fairly convenience has pause space. And said, I the will emerge. think fuel convenience the we continued convenience overall, of pick that back kind their margins. I We've

optimistic about we're pretty that. So

Kelly Bania

your of a having about And foodservice and terms your customers of the more you terms in in detail just right what current make you're little bit environment? can kind in what's to talk changes of for programs, make help

Scott McPherson

going this. No. We've from been we think It's really in to what are a Kelly. question, kind on as great focused we of the be impacts emerge

I is think think, place about first clearly, foodservice. the we

foodservice, about the to I things about think you you grill roller are think think when that be the public aspects self-service of going are to and challenged. open

array is And a We vast focused on options. we're other the of items. thing prepackaged packaging foodservice have just

containers. prepare So could people provide could - stores then and to-go

behavior. a path think really but convenience, be to think there's growth there's foodservice in see we going I continue definitely change So viable a in to consumer to

The we've is around exists I'd seen we other say categories. believe emerging thing an opportunity that

think category whole we're very situation sanitization channel supply the didn't really to a hand creates for I our strongly sanitizer, is that I gloves, wipes, going masks, clearly, And in that optimal exist think convenience. to be chain. itself where channel the into that, sell able

area So, we're I an that's really focused on. think

saw just traditional grocery And growth probably grocery items. in, in that and as big saw the other well emerge, baking we but one primarily we

flour, think can And for has - period sets some the an to yeast, I on and I will that the trend. and expand So continue of that opportunity well as think those capitalize convenience time.

Kelly Bania

just if I trended missed and if this period what talk and how guess apologize, Okay. through e-cigarette - about forward? trends you're you expecting, still That's anything, could And I just interesting. can say has it, you going about I and that

Scott McPherson

had of product returns disruption. that fact e-cigarettes, by manufacturers. were on we driven flavored was largely of million in lot first mean, that first had Yes, We but $XX in Kelly. overall I the quarter the quarter clearly, to down a the

actually were So we quarter. that, without in up the

category this And clearly, I year. growth don't big a see being it

I we slightly. early in to that's was generally going point this flat still - we this thought I early year it that think to outlook think And time. at late up or called last my be year, out

in is, But cigarettes, flavors, of the seen too. first - may one pretty through you elimination we confusion think thing And transition some some you've performed you've I combustibles well. seen that e-cig have regulation seen back have have quarter I combustibles the of - to think and shift

look for to but this year. be forward we at flat the point - So

Kelly Bania

Okay. That's helpful. what a And can of and cost back just maybe more expect we maybe go kind mean help I you think that to should reductions. the little us about clearly QX? then back at coming as improving and to just least ramps for And volume of seems those how like it's coming about maybe flex back? in think months, the already expenses up to

Scott McPherson

volume-driven. Sure. I clearly, X,XXX we count mean, clearly, Kelly, people. of of is a head And part that made reduction

now. Some our as back line. taper of returns. so in variable think our volume right to route infrastructure, I we've said, per We've productivity that up was line be cubes got we our But as clearly there's going I got like, in feel fixed some in

expenses think I of percentage going managing good as we'll a a do job So forward. revenues

don't hard at transparent for we've ball been as I in point. I we think point. this to so a through as the the much going it's I as great clearly, quarter, it's expenses But volumes to fluid, me volumes. pretty how what's this really mean, crystal could well anticipate on have transpire look very at

as give be to transparent as could and we much information we you we could. as as So, tried

Kelly Bania

Okay. Thanks.

Scott McPherson

Thanks Kelly.

Operator

comes from Chris it from I Mandeville more the queue, Jefferies. have do one in and question

open. is line Your

Chris Mandeville

guys. Hey

gross now we'll days XX points down basis. probably that the Sorry, a life it's on assumption of we're in guess now the in the Scott, few basis here, I - May just XX reopens see back I April. here the hope as so a is myself. of economy state-by-state margins that fair worst to starting it signs couldn't seems help first see. I on

dynamics well that's surrounding was cigarettes as maybe categories, secondarily, maybe the to down what latter? example, get I first within color mix looking the maybe of trade as some for in and in question. packaged seeing terms select So you're even then in But beverage

Scott McPherson

Yeah.

anticipate basis second non-cigarettes, Chris, primarily your mix going seen answers don't first non-cigarette non-cigarette category. point. - question, at is think within know mix question as hard mix clearly changes. It's I the that XX at I if the in We've it half to about versus of changes is some to this the worst. be about the points you look sits is cigarette if today, that's But

in obviously, the So margin. the growth cigarettes affected

the non-cigarette our within category. actually mix is half seen Clearly, growth and we've tobacco categories. in cigar other The

And we've snack - foodservice biggest seen our categories probably and snack, seen headwinds headwinds in. in categories are beverage, the we've

kind I think much at to margin, think So on rebound. will. question in those reason can don't than a I some why part look we on clearer pantry-loading that's of I it think I have see do little your and see answer a the as I out, called I they Other as tobacco nicotine, that they give some rebound. and you'll color things picture have how so to wouldn't how headwinds foodservice in will I'd mean today. around clearly that of short But run. I is

Chris Mandeville

category down you brands? in are trade seeing cigarette But Sorry. to the terms more discount of

Scott McPherson

of a run that on Yeah. called on little they've a their bit down. trade seen out definitely Altria call

a I haven't trade And in some and down. So we hard decline impact been real in It's in margins. historically, we mean quick have on far, material such seen spike seen a volume. volume periods, this to then recessionary tell. has

of there. lot just we And on - haven't material margins yet. noise there's seen impact But so a a

carton we to a you carrying products. to our but per tend on And on less a cents-per-carton But is if make bit on is cost little on generics. too, there less down, Obviously, a basis. less tend the trade - margin we bit bit make little cigarettes make we little know, the a generic as is

Chris Mandeville

Right.

was realizing there And necessarily renegotiations, just can that of you discussions off update notable XX the but on months. if those so just that to some Okay. have was then curious on you customers last any one, respect M&A contract in more with the can't hold next up you coming

Scott McPherson

to would through been we with. work been partners crisis whole I have Yeah. mean great this the key awesome. this, customer have say I They've

customers. customers. renewals confident I partnerships partnership all think I on working And position. in on strong clearly, we feel very of key it's really our with and renegotiations are our right about those our now with strengthened And really

Chris Mandeville

Best QX. in guys. of Thanks Okay. luck

Scott McPherson

Chris. Thanks

Chris Miller

Thanks.

Operator

And sir, we have no further questions at this time.

So turn closing remarks. for to call Lawrence Mr. I'll the over back

David Lawrence

We for Core-Mark. Thank you this us morning. your joining in appreciate interest all

questions, hesitate on My investor David you website. any information reach page Lawrence. have follow-up out me, contact for you Thank don't relations available to all of to joining. our is If the

Core-Mark Hldg (CORE) 9 May 202020 Q1 Earnings call transcript