CORE - Earnings call transcript Q2 2020

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Operator

Welcome to the Core-Mark Second Quarter 2020 Investor Call. My name is John, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note, the conference is being recorded. turn over now David will I the to call Lawrence. And

David Lawrence

Chief led Today's Officer; McPherson, our call you. by and Officer. will Miller, Executive Thank Chief be Scott and our Chris Financial President

Core-Mark that the call the over earnings noted the I out advantage Before risks we turning Litigation intends which provisions our uncertainties, Reform morning. filed remember to comments statements, take may to Please of the include to Harbor in by Securities such will results those release are may Scott, actual statements. subject point from indicated and implied that today Private Safe and as of forward-looking materially Act this differ or

report described detail company SEC risks The the duty these does not are of undertake Some update in Form statements. on such any forward-looking XX-K. our in annual to company's filings, including

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

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

Scott McPherson

has second joining support through recognizing want what remains quarter for on challenged their product volume, mix. dynamic quarter, and industry cooperation certainly and COVID-XX margins for our swings commitment, employees, in Consistent us everyone vendors. first today customers to with the Thanks, our with call. by our and I begin I'm significant environment. grateful a

and Despite the progress move have high navigate variable on technology our ability benefit align end, compressed, after that affected by consumer consecutive volume product metrics. to full the shareholders. consistency from proven guidance, But the previously continuing which had this you and Obviously, the of productivity remain to COVID-XX volume that to uncertain. our fixed-cost many perspective, to margins lie three a categories demand I while our we on remarks. reasonable these remain restated year to displaying pandemic, outlook to saw cost, related results. leveraging to organization to our been on headwinds, level incentives, volume Chris confidence which noticed more withdrawn. foundation a provide had successfully related consistent resilience business has experiencing on margin the some on the To year we Although lower continued our forward will a trends its sure through months assumptions challenges our improvements full of ahead our and I'm transparency our costs, details initiatives, his in executing meaningful making mix. in in prepared by we provide quarter,

basket, been the despite From C-store Turning to our industry throughout has recognize to structure Recent quarter. behavior. challenges. XX% to to XX%, rebounding the revenue shows quarter, to driven our of size the ability the trips in increase cost of to by an declines early consumer trip XX% the the XX% to volume $XX.X product and primarily in margin XX% the flex trends perspective, down XX% the decline been from steep which up industry the peak margin a from and range demonstrated in quarter, million data ranging mix. has EBITDA Offsetting consistently approximately purchase the average it's important related

including primarily being prepared alternative and volumes IRI number tobacco, the that would and snack up C-store sales growth of reflecting for continued by details foods, in are to key is indicate Nielsen driven surface, X% but declines nicotine. and alcohol reveal that the a underlying On quarter, X% categories,

recovery compared in the food, the lower and non-cigarette for lower total and in a sales. of strength growth of categories. segment. challenges X% and reflect caused The reflecting within decline cigarette coupled in non-cigarette declined margin resulted results driven our sales sales X% to second a and quarter, by health The X.X%, decline mix half at weakness tobacco Looking in sales higher margins beauty the These by results cigarettes approximately with were where the throughout basis the XX%. the quarter, mix compression, and impact X% a was seeing down non-cigarettes the with of products. non-cigarette the categories down and margin gross margins XX of general, our April, margins point from driven of by of a impact versus by candy and margin profit cigarettes mix headwind significant half Remaining non-cigarettes decline presented

our category, reflects was products, percentage both in Turning margin lower change mix. of in percentages to associated rate, impact and general vendor vapor sales the majority declines decline well of issue. margin the vapor the incentives health, beauty volume as with a in as lower which contains The

cubes in rebound a throughput metrics as we vape see prior growth we volume the that levels accomplished We recover. and work meaningful in margins commitment perspective, and hard transportation continue the an operational category. expect impact COVID-XX. quick the our nicotine delivered of of metric to alternative headcount spite this to significant employees. see From year actions steady sales of per We to expect warehouse route through and exceeded in and volumes Longer-term, decisive

sheet, miscellaneous cost that organization, actions response From In must to a million cost the reductions times. execution compared one as of quarter. align to management pandemic portion we did cost including Maybe pressure this margin expense also SG&A, generating we our a We the we expense finishing expenses is taking contribution reduce an cigarette of will balance the the the oversight. crisis, actions we and heading of It's approximately margins solid the of flow, health sales, in helped nice the We the X.X other in maintained year quarter, importantly, emerge of by significant throughout strategic better with proud recognize in the cash volumes. free critical, and to position liquidity and cutting environment $X the nature, are preserved Under executing note asset some aggressive variable in labor, costs in solid sales believe in most from general we recent bad benefit travel to of business and income job that to related the strategy sharp despite while we our expenses that quarter rest in generated quarter. meaningful management including inventory efforts to sales the standpoint, throughout including drive receivables now on the as us volume where as debt financial are crisis. on have COVID-XX the growth usual, reduced the price we are leverage our structure tied a our we almost focus an of to to inventory to period. the of and and prior faced merchandising increase, took important

for programs, customers effort and growth the accelerated with was redesign sales management crisis, in be on have customers driving across this of two new as virtual challenging greater new This SmartStock set of perfect store pandemic We've more our growth experiences Communicating base. in videos, optimized activity early mix we leverage recapture Center re-launch for can program emerging to pairs launch during and despite of to ahead our category by the resources launching category the us our plans featuring transformation and which with sales slowdown using product a alignment time has in We in exciting management. educational forged in are our to perspective our engage. data focused conversations online cornerstone and program, efficiency the trends led been to seeing and analytics. our of to recovery sales the new force, real-time an and a incentives, nearly Excellence designs, world-class and momentum drive customer merchandising same-store margins are willing decades, some

changing evaluate programs in have about consumer behavior the by capitalize We pandemic. and to continue launched the brought environment current opportunities on the to

convenience protective new gloves, turnkey and program for wide of a supplies containing array consumer Our to a sanitizers satisfy masks, equipment cleaning retailers, demand. personal solution is

heat will program launching begin items front, is through feature products new, Curated, focused private-label eat And mix which bringing and on our consumers end, go. the retail packaged to be the program to hot industry. and sourced we innovative On on adding before Core-Mark year items product food our to convenience we food grab, for our re-launched the

color crisis a hard management levers, category financial costs. what progress of drive to committed for positioning our many volume on we will to of the us lot our to quarter transformation in but acquisition to taught most and and potential of during on a help our on front, leverage as call control, the the current consumer leverage the of implement technology dialogues, changes growth economic were continue much company leading to And to The on recent a results had continue but results impact as gravitate continue now meaningful workforce has we have the in to have move evaluate efficiency compression continued about was remains for finance to its quarter us pull we pressure. In the greater achieve of profitably, strategic cost toward mitigate we as terms operational opportunity continuing efficiency can We we beyond of COVID-XX turn well Chris processes. dedicated crisis all, investments ahead our to in as initiatives in we forward, I drive grow margin and behavioral recognize have our for of reflective detail trends. priorities that uncertain the timing environment. the we historical still the Obviously, on see active transactions with significant trends. this our our to over additional and transactional

Chris Miller

up start and decreased $XX.X with outlook year. our Scott our remainder for earnings Diluted performance, with the sheet compared an income million, quarter Thanks, last on share $X.XX, quarter cash the balance was year. year. everyone. flow, morning, and our $XX.X good then by the Net of last with for second update wrap I'll consistent per second quarter million provide for covering and to off the

the $X.XX expense, increased in the unprecedented deliver a as pleased FIFO, Total declined billion. to $X.XX margin sales driven to modest largely of our EPS in COVID-XX, in we're an EBITDA, to quarter business In operating X.X% and growth EPS the for on diluted $X.XX reduce a Excluding quarter and with size impact costs. sales to only quarter. decline right LIFO a result by and actions

sales COVID-XX inflation overall cigarette throughout the in year, of quarter than and quarter in declined by with tobacco in basis the From Total Consistent quarter the sales X.X%. sales approximately steady decline saw which non-cigarette cigarette of cigarettes, cigarette XX% carton of the steady and in with the points. exception X% of growth points in our X%, historical prior in consistent causing from X%. a trends the margin mix grew which consumer declined this outperformed seen We gross gross less across behavior our April, in recovery was that peak to points. the recovery outperform, offset sales all such basis higher throughout by with a remaining than saw and total a on trends. resulting from which mix the the for significantly is approximately basis products, change most have the continued for metrics OTP declines XX believe a compression trends price across Non-cigarette sales X.X%, continued the XX compressed sales XXX Total of declines industry reflects as we buying non-cigarette profit Despite the declines in finished for margin X% in decreased perspective, result other quarter. imbalance quarter, sales category by second recovery cigarette margins. categories, we we quarter Nielsen categories, a Carton remaining primarily IRI. Following profit April. overall as reflecting shift by

other within products In points, to X the of addition, margins and vapor margins. growth price cigarette the category. non-cigarette lower decline categories another due of non-cigarette compressed sales decline impact rates non-cigarette drove in the OTP in our and to the by our relation rates and mix was total The the in the basis inflation of in remainder majority

growth metric margins Our favorable to and sales vendor last mix. vapor year from more volume in benefited incentives tied targets

to both to have and we we see the we mix a likely we during and non-cigarettes COVID pause local cigarettes of in in mix to basis, sales longer-term. year-over-year of the mix expect margin finished expect to quarter. seen compared economic recovery that challenges our lower continued our has on non-cigarettes, see over sales compared meaningful the combination of recent pace outperformance recovery to The a and in cases margins dollars non-cigarette We Near-term, reflecting a at vapor sales of in results vapor. margins reopening pace July, pressure acceleration continued of as not reflects second and the pace on the overall level. slowing Based a the continue in of sales recovery moderated quarter in the substantial state where change the saw as within and

cigarette includes gross significantly expenses expenses $X.X the million, XX.X% the a reduction The expenses in in reduction period primarily inventory. inventory last week. quarter the our Our benefited quarter. metrics, offsetting second in our impact benefit cost in at in deliveries higher build associated levels from to workers' compensation warehouse decline year. same same the our of savings key and in reductions in compared the XX.X% with our gains of year remaining in throughput with including were strong safety per In metrics $X.X per decrease the headcount delivery quarter, our gains benefit the helped the reflected headcount delivery, operational coupled for by X.X% period Total and reduce performance operating a and improved the efforts lower holding for with and increase Also, holding route, cigarette operating last warehouse increase of and the and a our reflects for cubes a to with which associated of SG&A. strategic profit. The higher reduced price costs declined million number XX.X% in

puts we benefited other expenses. operating takes In reduced from of within terms and total expenses, travel

protective time costs and by expenses, increased savings personal costs were quarantines. equipment, these However, sick largely and increased offset with with associated other temp cleaning labor including including COVID-XX, associated

a labor are mentioned, our volume. significant associated to with variable reductions Scott savings headcount of As portion sales tied

beyond strategic operating expenses we further our in longer-term, and on drive in can economy to Based programs. we on and in permanent focused we the a headcount have on we approximately through merchandising made reopens on to and we $X million begin merchandising sales a number to-date, our our expect XXXX ramp up share we've selling and grow the reductions SG&A, headcount to that While market will back opportunities greater growth reductions have realized margins we actions sales as And our million in $X cost more estimate margin finance sustain environment. executing we and taken including normal focused that the of initiatives transformation. remain reducing same-store over

expect again of rate to this drive well and XXXX. continue cost deliver And year. in expense realize We solid the to savings million on end a planned basis operating $X savings annual this front on run the progress we're to positioned by

Turning facility, drawn million available to the the quarter sheet, million to and balance with credit $XXX cash. we $XXX borrow our $XXX on ended million in

The our taxes temporary generated we certain million cash deferred June working from defer For due of months XXXX. associated in with million capital. in changes and quarter a operating benefit was portion that ended the the to $XXX capital including in us payments third increase tax of excise working Canada XXth, to until program a flow, the permits six $XXX in cash

our The other from inventory of response increase capital working of terms in two temporary Canada to reduction included significant a in drivers in vendors COVID-XX. benefit in tobacco a and payment

in normal the to return to improvement terms temporary the expect We third quarter.

and of million, $X.XX inventory in to of $XX.X EPS XX% significant $XX to expense other $XXX of gains inventory XXXX. $X be is $XX about and We benefit key the remain wins. acquisitions of $XX the XXXX rate XX.X expect cash we EBITDA $X.XX the diluted be to income million. COVID-XX, we increased range headwinds million in million cannot to candy are updated initiatives. significant tax diluted new for no in and million our customer between or press ability our cost we expected of share. drove expenditures currently of We to morning LIFO deferrals assumptions expected In any between And for duration in and per does guidance large Cigarette be approximately confident be while $X.XX this mitigate these excluding a the be million, such adjusted expense impact $X.XX. gains lastly, be estimate terms, are guidance and customer million and to the of shares improved a expected Excluding summary, The million million assume and $XX EPS we between provided between in The release million. as guidance not sales through assumes to outstanding. $XX $XXX $XX.X flow. earned our LIFO the still holding to fully are portion million XXXX. reduction holding Other

We to that debt, may emerge and low for maintain you pandemic through continue from with to drive Operator, share very questions. and dividends. acquisitions, sheet priorities open our balance value healthy line include while now strong positioned liquidity this the to allocation a buybacks capital continue to shareholder

Operator

now [Operator And Stephens. Thank from Instructions] from you. We'll question-and-answer begin first is question the Ben Bienvenu session. our

Ben Bienvenu

thanks. Good everybody. Hi, morning,

Scott McPherson

Ben. morning, Good

Chris Miller

morning. Good

Ben Bienvenu

could of what So will there. us to think improvement. I was about from a in typically, first kind working a notable, coming Chris, you perspective? ask, debt good I thought give you XXXX to year? provided focus color a of leverage of sheet. is capital debt the some us you look be seasonality exiting the the expect load think it XQ you know there's sense know out where like capital I debt but lot of you in the paydown on want the it working help it know balance I of helpful transitory, in but

Chris Miller

Sure, Ben.

to from standpoint, year, flow going last I comparable our year. free we're cash I'd this generate to meaningful I cash flow So mean, think free say XXXX, for

know we're the you X leverage going to a from think to year end I X.X times. standpoint, probably So

Ben Bienvenu

through business. That's lot okay. And the know it great, you you Scott, then, you about talked a COVID, navigating about taught

how or be. you help Any you about normal, you us your cost Recognizing how structure how and flow going out can operating can think can give leverage that's helpful. when about better business potentially variable, back is demand you of COVID You've be about you efficient through to there coming think maybe learned the you and context think lot forward? of a about know improved would in returning color

Scott McPherson

Sure, Ben.

saying his million with business. kind $X to that expense we've know in go-forward we that we've that's business, I think the - side the fixed in still of I'd know of that $X think SG&A start Chris that million we'll captured out called you of and you of stripped script, out the call primarily

last know and throughput you that know variable actually you the and out, than were side, cubes in and year over did As as called delivery lot we warehouse the we expense, rates per at were of quarter. the to we of a higher able course load what is achieve we

I know think can say be you learned where that's I So we more we efficient. would how

in variable our I think You know, I call sustainable. would efficiency is we labor, up what picked some which

I know and the spend. in we're there that out mean, maintain to expenses going say expenses thing in were you QX and have to one I'd I to my around know know travel comments, and we called everybody would in clearly You I is, on grow didn't QX. you caution some business,

we of mindful see are just didn't And know that so expenses you so return will QX, that. some in be that there

Ben Bienvenu

sense. Makes

or your as the between last and Can of customer base? operators And would you industry? geographic be large trends you of How if the health you small health one helpful delineate about well. characterize just that'd Okay, can and talk the for me.

Scott McPherson

Sure.

country. would parts most have You I you nature largely we remaining we've we've which seen California, presence been in reactions know with our the of in And know that's say restrictive the come the compression you to due to their where COVID, maybe that's back. in is so California. stronger definitely slower the start I Probably to mean, of seen a I'll know middle return geographic.

mix deficit than still that's represents customer schools, You fairly and store know most a standpoint, has we've our has strong, clearly, locations, prior We of you other one got some non-convenient know our year. from to a convenience say our you know pressured. impacts. as casinos, segment the - customer XX% obviously, segmentation I'd is that's non-cigarette remained health have and that airport little And over recovered

part contributor So of it's although part revenues margin total a a huge our as meaningful of it's our well. non-cigarette not meaningful and to revenues, a

So has had that still you definitely that an know impact.

We are to but you know there, see it's starting gradual. recovery definitely more

Ben Bienvenu

okay. Yeah,

Scott McPherson

all catch I your if know don't questions. I

Ben Bienvenu

this, rest That's nice Really perfect. luck good year. through managing perfect, that's of the on the job and

Scott McPherson

Ben. Thanks,

Chris Miller

you. Thank

Operator

is Mandeville [sic from next Our Jefferies]. from [Tempris] question - Chris

Chris Mandeville

Yeah. not sure I'm morning, what referred Jefferies. just Good firm but guys. to, he it's

think if EBITDA actually suggest turns and So your I'm negative bit, my of Connecticut, it I negative so Scott, this in back further updated is in that year. off a looking math in and little moves actually apologize guidance, without here growth power the but sales at growth I half

see just Is maybe are but as color a yourselves really recovery to a more? So you reason share into there gains position bit in helpful. would be referenced Just greater can why, some of little out for of you that or trying going you having XXXX? spend gradual to flesh function some volumes it you some the just

Scott McPherson

Yeah absolutely, Chris.

obviously through cigarettes from see flat their the revenue Altria I'd some standpoint, that recent be the I is revenue expect say out forward. year. carton moving they to They to know balance driven decline a first call called by mean, and been you of thing don't You most know the even has the know expect on you

we capture you influence top has want you anticipate on so fact make EBITDA and had that last don't I million we year, standpoint, that that was candy. a to you a know an the $X price know - So that definitely From material increase, sure line.

anticipate definitely forward. going You know that don't

guidance revenues, year our standpoint, you non-cigarettes we improvement bottom some back half guidance, in that. half in know the margins in you mix modest So of know guidance, recovery we the you And from say definitely in seeing at know expenses looked we're at margins, and I'd and recovery know a as of half anticipated the of did you at obviously a recovery primarily. the revenues, align some top with very obviously

Chris Mandeville

guess Okay, we understand these that. by can are why? where from I losses And And that I you declined noticed I about X,XXX of are and accounts them? Do some up or renewal retain Murphy, X-Eleven, about like able them major your that you in stores coming quarter-over-quarter. help update Walmart and customer coming confidence those think your on for as comments shortly. us any then count Maybe then any being appreciate to regarding have

Scott McPherson

Sure.

So customer count. let's with start

of had the seen of them stimulus and obviously have as say that's think has impact. been So probably of definitely say you overall volume you deemed bulk a say did lowest know convenience you the I disproportionate chains, that decline decline those would we've you I convenience know our some share stores, that at you you quite We but strong. prop and Ben address fuel well, stores a know would obviously, mix margin low some I'd count, I is is, I you didn't has and the of would know a challenges that this open, kind helped health not know asked we they lion's have had count, pretty was I it really and very of store - you tier in independents spending. and non-essential store it. our COVID up, where and know that convenience margins were the mean, I that - I still businesses know were so know of know overall things in the have helped small say

health of base And so, strong. customer our think yeah, I the is

portion but we those speak I contract little a X we've contracts, in really we I X XX positioning From top ones. this that had a already year. know for obviously think about obviously the the re-signed recovery feel that we our specific don't mean, and been due the good store of of standpoint, other has our slower. had to of you non-convenience

So a I think in - we're

Chris Mandeville

- that's Okay

Scott McPherson

Really good spot.

Chris Mandeville

I here. the for hop queue before final then Great. in And me the back one

I matter. Chris trends could seeing programs what in for that referenced at might mix out with saw growth of Maybe in about Thanks. you you we category, think as think finer your and quarter-to-date just help what and doing to terms forward, service non-cigarettes on that you're in going had a in stalling that food customers? sales look terms the point some how of in improvements be and facilitate better put to you

Scott McPherson

Chris. you Yes, bet,

So the we've for most our reporting. that's lies our seen category to food category know in you sure our within overall go April food food down I when category back service you pullback been is late stalled what your and category, I the we know you a that I with The more consistent there. food, industry. that I so well down the is country you has XXs slower, results down our mid-XXs, driven think was you But saw even you've know into stuff as the decline has fresh there's and March, you I most came obviously little food little think IRI seen flattening by most it's you trends, restaurant-quality that would of definitely but think now the fast food. that And in the see and and high-teens. alignment and still bit, call - know what has restaurant some COVID, we've recovery the of because has in out, it recent of a of the know And recovered, know some seen that seen

think of relaunched so just at around we foods. driven food call really and think a to to number program program to and the the standpoint, today, I right the some counter. register-served, a consumer hesitant to think current buffet, think a really grab, just still a program capitalize do we're is but my packaged It on people by And self-served little will from I I fresh I be go things eat open mentioned or see because a I know fast pastry gain And doing to know go program our has on know We that think the you week, confidence or food we're employee. roller heat things traction, are now you that's you I the snack. in you recover. grill So doing And that and the will the behavior. last return, which to option continue served will the

Chris Mandeville

Okay, half. great. best guys luck in the and of Thanks back

Scott McPherson

Chris. Thanks,

Chris Miller

Thank you.

Operator

Bania is question BMO. from Kelly next Our from

Kelly Bania

good to questions. really that I levels. hoping in you strong performance Scott, prior there customer go our you thought year I warehouse have can I performance said is sounds Hi, size would taken to like really Thanks exceeded drop per the lower that on would morning. elaborate which you of wanted how the for be I'm strong think some throughput, just and did headwind, just that? sustainable. a back,

So us performance? how you're maybe strong that understand you just help achieving know

Scott McPherson

of maintain picking cut you also to I a They're really point they're warehouse to Yeah, declined. pointed We delivery I to that's orders. to a say drop partnerships, some orders. number able customer a know size, good picking would as I - transportation of had helps you volume question, warehouse. not great were before helped and fewer delivery small us which know because lot they of We Kelly allowed and our and frequency, the which actually the would larger us

and sustainable So in the frequency, of you definitely know very us delivery have volume that customers until to of some been a reduce I returns allowed think is number that's helpful.

really know is, it rid the way and strategic approached in reducing I'd the in other getting reduced you we thing how on organization. very of performers were we our think say was lower it we workforce, The by I you know

are drivers workforce, And clearly quality know from behind know would I helped know a people, back think as you we're as So well. obviously, say those us productivity means I maintaining bring that that it. we the back but you you bringing standpoint

Kelly Bania

Okay, in help the just margins you category? and magnitude mentioned a even expect that's there, maybe to back sales terms vape understand expected as And you next you in years the half, Can vape you recover. meaningful know helpful. but beyond in within of year also two rebound you a of us especially the over what is know timing terms

Scott McPherson

Yeah, a Kelly tough - it's a really it's question.

up think I were. more But public slightly in real obviously know and vape a as expected They're through all know I is be I consumer the like to seen in seen you the I the much. we of behavior the Well, places I time people are seen recovery year. at consuming said quicker of clearly was we've to more, balance basically combustibles think contemplating I be think we've shift you from know in what the as not probably decades. combustibles, last things One for vape we've a you flat COVID, home flat in I think on first call

had has on disproportionate vape. a impact that So

run funding the long forms run, know I a the their nicotine nicotine, category, believe be investment that'd around are I think spending, others is or nicotine alternative clearly in truly other vape in all growth the is Altria of whether space. you that long and and alternative

elements combustibles, is for us, To the in margin margins the that in profile. overall other for couple definitive long the just helps alternative are and long try a not run around clearly, run, of be and things, better a vape vape I shorter volume-driven. mean, of affected programs, nicotine So think that run little our a was and and vape. I mean, we in had our you margins know I them that our lot more Kelly, one you,

more in margin a in incentives as other vape that volume margins. environment, mix, pressure lucrative a clearly affects we and and see is a headwind of had have we kind And little second disproportionately manufacture that They the change JUUL the saw first standpoint. quarter. were in then thing more in from our declining happen We a margins

you So growth the some have from think again. on to lot, normalize. getting incentive helps back think We'll improve? will a margins sales how track the ability mix funding all vape because standpoint make and I a and you know does I know that revenues

it's And significant that's consumer obviously see say. quickly hard was very so we're how know know year, still QX. focused probably say we're would see behavior you to see that into recovers. something and normalize, margins next It on to I on. start answer, the but think, And to as we in depends I QX a recover. pressure going that we'll long I

Kelly Bania

normalized talk I more incentives, level volume think And mentioned, of drives to Can the which to very you of of would category. back or were that's like the No, growth lower helpful. what this you return incentives? about kind think, get specific what incentives, I

Scott McPherson

with just Yeah, space. Kelly we quarterly in manufactures, our vape have the incentives, incentives, a not of lot

But growth that sliding you a know would year-over-year that of on know for as there's any know clearly those our impact margins. some an of say well. for you some So and usually meaningful has our you I us scale know qualifies manufacturers of you on level incentives,

Kelly Bania

one in assuming in the you're I'm you mix guidance. remind last from I ended the how little but helpful. mentioned can you terms quarter substantial more of quarter, where then you on bit your me had think one a Correct know mix? you if your know Okay, so on wrong, And ended you you us not that's change just

Scott McPherson

Yeah.

So in To quarter of of higher that slightly know XX the year see We basis end, get that margin you anticipate the may bottom the were improve mean to in From I obviously, we points. were mix end back for improvement more mean, to going some over that that. of to XXX standpoint, balance you get I a rate. And carton by I to know, down question the up mix the we guidance. decline down. you we that will points. itself. were answered earlier, we're anticipate as we'd assuming year, half obviously, the know that's basis at standpoint, the normalize not Obviously, maintain help which Chris' cigarettes to

Kelly Bania

you. Okay, thank

Scott McPherson

Kelly. Thanks,

Operator

Instructions] [Operator question Raymond from Bobby is Our James. from Griffin next

Alessandra Jimenez

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

Scott McPherson

thank you. bet, You

Alessandra Jimenez

First, I yeah, had of - course.

benefit that and in you just a are category? recovery the product country First, category the difference I each seen recovered Like in category regions from more a you quickly? progression. a overall food of or sales had from sales candy seeing product growth have Have follow-up on

Scott McPherson

pressured, seen of a I as I'd with food else. out, haven't or say or haven't seen country. I'd the has rest we West called e-cigarettes California consistently say the I would of clearly I recovered the and Coast the on country. but disproportionate by been recovery category-by-category say it's more parts anything a disproportionate impact

Alessandra Jimenez

exit then helpful. will that's can And COVID-XX the do advantage crisis? that you pandemic any the we interesting opportunities as create take believe Okay, of M&A you

Scott McPherson

The be answer yes. would short

good wholesalers out I still know right kind looks really that do and think But in I think now obviously, think You and an the is, business the think in would still a definitely sorting market I amidst a run. opportunity not that job like a us selling. it their I think evaluating and state of But I know are looking acquisition, us out. piece you of other have focused to answer of be most longer steady on to what the we to for we're COVID, like, long making business bring acquisition for understand the is

Alessandra Jimenez

And best half. of the luck second that's helpful. Okay, on

Scott McPherson

Thank much. you very

Operator

further have back to questions we over the no David turn time. And call closing I'll this at for remarks.

David Lawrence

joining your for us all this We appreciate you morning. interest. Thank

If reach free you information have to our Investor of any so me. is feel the My available on to questions, Thanks out section Relations contact website. much.

Operator

and Thank for today's and Thank you, may gentlemen. ladies you call. participating you That disconnect. now concludes

Core-Mark Hldg (CORE) 9 Aug 202020 Q2 Earnings call transcript