☒
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Annual Report Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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20-1489747
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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1500 Solana Boulevard, Suite 3400
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76262
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Westlake,
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Texas
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading symbol
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Name of each exchange
on which registered
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Common Stock, par value $0.01 per share
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CORE
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NASDAQ Global Select Market
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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•
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Record net sales of $16.7 billion.
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•
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Our net income increased 26.8% to $57.7 million.
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•
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Adjusted EBITDA increased 15.8% to $190.7 million.
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Year Ended December 31,
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2019
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2018
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2017
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Product Category
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Net Sales
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% of Net Sales
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Net Sales
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% of Net Sales
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Net Sales
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% of Net Sales
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|||||||||
Cigarettes
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$
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10,892.7
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65.3
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%
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$
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10,974.5
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66.9
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%
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$
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10,887.4
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69.4
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%
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Food
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1,746.4
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10.5
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1,659.0
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10.1
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1,561.1
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10.0
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Fresh
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502.8
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3.0
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474.2
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2.9
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436.3
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2.8
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Candy
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1,039.0
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6.2
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992.0
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6.1
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833.4
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5.3
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Other tobacco products (“OTP”)
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1,438.9
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8.6
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1,387.2
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8.5
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1,272.3
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8.1
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Health, beauty & general
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847.2
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5.1
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711.5
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4.3
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513.3
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3.3
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Beverages
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202.1
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1.2
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191.0
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1.2
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183.4
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1.1
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Equipment/other
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1.4
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—
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5.9
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—
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0.4
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—
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Total food/non-food products
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5,777.8
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34.7
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%
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5,420.8
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33.1
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%
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4,800.2
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30.6
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%
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Total net sales
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$
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16,670.5
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100.0
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%
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$
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16,395.3
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100.0
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%
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$
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15,687.6
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100.0
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%
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U.S.
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Canada
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Total
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Sales and marketing
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1,505
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105
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1,610
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Warehousing and distribution
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5,461
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424
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5,885
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Management, administration, finance and purchasing
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900
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160
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1,060
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Total for all categories
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7,866
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689
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8,555
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(1)
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Excluding outside storage facilities or depots and two distribution facilities that we operate as a third-party logistics provider. Depots are defined as a secondary location for a division which may include any combination of sales offices, operational departments and/or storage. We own distribution center facilities located in Wilkes-Barre, Pennsylvania; Leitchfield, Kentucky; and Forrest City, Arkansas. All other facilities listed are leased. The facilities we own are subject to encumbrances under our Credit Facility.
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(2)
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This location includes two facilities, a distribution center and our AMI/Artic West consolidating warehouse.
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(3)
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This facility includes a distribution center and our AMI/Artic East consolidating warehouse.
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(4)
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This location includes a distribution center and our Artic Cascade consolidating warehouse.
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(5)
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This location includes a distribution center and our AMI/Artic Northeast consolidating warehouse.
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(6)
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This facility is our Canadian consolidating warehouse.
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Investment Value at December 31,
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||||||||||||||||||||||
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2014
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2015
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2016
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2017
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2018
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2019
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CORE
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$
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100.00
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$
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133.49
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$
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141.51
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$
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105.02
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$
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78.61
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$
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93.20
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Russell 2000 Index
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100.00
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95.59
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115.95
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132.94
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118.30
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148.49
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NASDAQ Non-financial Index
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100.00
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107.20
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115.40
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151.42
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147.55
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202.94
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S&P SmallCap 600
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100.00
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98.03
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124.06
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140.48
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128.56
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157.85
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New Peer Group
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100.00
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58.15
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72.05
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77.91
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51.35
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71.69
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Old Peer Group
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100.00
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97.48
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133.20
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149.06
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149.53
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206.39
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Calendar month in which
purchases were made:
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Total Number of Shares Repurchased
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Average Price Paid per Share(1)
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Total Cost of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
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Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
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October 1, 2019 to October 31, 2019
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63,204
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$
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29.49
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$
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1.9
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$
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12.4
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November 1, 2019 to November 30, 2019
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453,552
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26.46
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12.0
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0.4
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December 1, 2019 to December 31, 2019
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—
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—
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—
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0.4
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Total repurchases for the three months ended December 31, 2019
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516,756
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26.83
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$
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13.9
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0.4
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(1)
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Includes related transaction fees.
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Year Ended December 31,
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(In millions except per share amounts)
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2019
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2018
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2017(1)
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2016(2)
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2015(3)
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Statement of Operations Data:
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Net sales
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$
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16,670.5
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$
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16,395.3
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$
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15,687.6
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$
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14,529.4
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$
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11,069.4
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Gross profit(4)
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924.2
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867.5
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791.7
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736.9
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637.9
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Warehousing and distribution expenses(4)
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566.2
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540.6
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504.1
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431.2
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352.6
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Selling, general and administrative expenses
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255.4
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245.1
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224.3
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210.3
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196.0
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Amortization of intangible assets
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10.0
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10.0
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8.5
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5.3
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2.6
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Income from operations
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92.6
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71.8
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54.8
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90.1
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86.7
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Interest expense, net(5)
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14.4
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13.7
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11.0
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5.1
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2.0
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Foreign currency transaction losses (gains), net
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0.8
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(1.8
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)
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(1.8
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)
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(0.5
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)
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1.8
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Pension termination settlement
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—
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—
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17.2
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—
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—
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(Provision) benefit for income taxes(6)
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(19.7
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)
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(14.4
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)
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5.1
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(31.3
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)
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(31.4
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)
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Net income
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57.7
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45.5
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33.5
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54.2
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51.5
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Per Share Data:
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Basic earnings per share
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$
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1.26
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$
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0.99
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$
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0.72
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$
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1.17
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$
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1.12
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Diluted earnings per share
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$
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1.25
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$
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0.99
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$
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0.72
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$
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1.17
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$
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1.11
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Shares Used to Compute Earnings Per Share:
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Basic
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45.7
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46.0
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46.3
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46.3
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46.2
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Diluted
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46.0
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46.1
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46.4
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46.5
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46.6
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Cash Dividends Declared Per Share
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$
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0.45
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$
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0.41
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$
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0.37
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$
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0.33
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$
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0.29
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Other Financial Data:
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Excise taxes(7)
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$
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3,341.3
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$
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3,491.4
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$
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3,462.6
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$
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3,022.0
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$
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2,211.7
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Cigarette inventory holding gains(8)
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23.0
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19.6
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16.1
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15.3
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10.1
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Other inventory holding gains(9)(10)
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6.9
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7.4
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—
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—
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8.5
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OTP tax items(11)
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—
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—
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3.3
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—
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1.7
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LIFO expense(12)
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27.6
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25.2
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21.5
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13.2
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1.9
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Capital expenditures(13)
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22.8
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20.1
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48.2
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54.3
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30.3
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|||||
Adjusted EBITDA (non-GAAP)(14)
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190.7
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164.7
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135.7
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152.3
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135.2
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December 31,
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2019
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2018
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2017
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2016
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2015
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Balance Sheet Data:
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Total assets
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$
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1,898.4
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$
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1,666.1
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$
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1,782.5
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$
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1,492.2
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$
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1,077.3
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Long-term debt(15)
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382.1
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346.2
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512.9
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347.7
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60.4
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(1)
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Farner-Bocken Company was acquired in July 2017 and the results of operations have been included in the selected consolidated financial data since the date of the acquisition.
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(2)
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Pine State Convenience (“Pine State”) was acquired in June 2016 and the results of operations have been included in the selected consolidated financial data since the date of the acquisition.
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(3)
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Karrys Bros., Limited was acquired in February 2015 and the results of operations have been included in the selected consolidated financial data since the date of the acquisition.
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(4)
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Gross profit represents the amount of profit after deducting cost of goods sold, certain surcharges and other items from net sales. Warehousing and distribution expenses are not included as a component of our cost of goods sold. Accordingly, gross profit may not be comparable to those of other entities.
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(5)
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Interest expense, net, is reported net of interest income.
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(6)
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Benefit for income taxes for 2017 included a $14.6 million net income tax benefit as a result of the impacts of the 2017 Tax Cuts and Jobs Act. See Note 11 - Income Taxes to our consolidated financial statements for further discussion.
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(7)
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State, local and provincial excise taxes (predominantly cigarettes and tobacco) paid by us are included in net sales and cost of goods sold.
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(8)
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Cigarette inventory holding gains represent income related to cigarette inventories on hand at the time cigarette manufacturers increase their prices. Such increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase. The higher gross profits are referred to as inventory holding gains. This income is not predictable and is dependent on inventory levels and the timing of manufacturer price increases.
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(9)
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In 2019, we recognized $6.9 million in candy inventory holding gains. Candy inventory holding gains represent income related to candy inventories on hand at the time candy manufacturers increase their prices. Such increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase. The higher gross profits are referred to as inventory holding gains. This income is not predictable and is dependent on inventory levels and the timing of manufacturer price increases.
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(10)
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We realized net cigarette tax stamp inventory holding gains of $7.4 million and $8.5 million, offset by associated fees, in 2018 and 2015, respectively. Cigarette tax stamp inventory holding gains represent income related to tax stamp inventories on hand that may be realized at the time taxing jurisdictions increase their excise taxes, depending on the statutory requirements relating to the inventory on hand at the time such excise tax increases. Such tax increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase. The incremental gross profits resulting from such tax increases are referred to as inventory holding gains. This income is not predictable and is dependent on inventory levels and the aforementioned statutory requirements.
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(11)
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In 2017, we received OTP tax refunds of $3.9 million related to prior years’ taxes, offset by $0.6 million of related expenses. In 2015, we received OTP tax refunds of $1.8 million related to prior years’ taxes, offset by $0.1 million of related expenses.
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(12)
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The decrease in LIFO expense in 2015 was due primarily to a decrease in the Producer Price Index (“PPI”) for certain product categories we use to measure food/non-food LIFO expense as published by the Bureau of Labor Statistics.
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(13)
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Capital expenditures in 2017 include expansion projects, including investments associated with our supply agreement with Walmart and maintenance investments. Capital expenditures in 2016 include leasehold improvements for a new building for our Las Vegas division and other building upgrades, as well as logistical equipment to accommodate new business.
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(14)
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The following table provides the components of Adjusted EBITDA for each year presented (in millions):
|
|
Year Ended December 31,
|
||||||||||||||||||
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2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Net income
|
$
|
57.7
|
|
|
$
|
45.5
|
|
|
$
|
33.5
|
|
|
$
|
54.2
|
|
|
$
|
51.5
|
|
Interest expense, net
|
14.4
|
|
|
13.7
|
|
|
11.0
|
|
|
5.1
|
|
|
2.0
|
|
|||||
Provision (benefit) for income taxes(a)
|
19.7
|
|
|
14.4
|
|
|
(5.1
|
)
|
|
31.3
|
|
|
31.4
|
|
|||||
Depreciation and amortization
|
60.9
|
|
|
59.5
|
|
|
54.4
|
|
|
42.9
|
|
|
37.9
|
|
|||||
LIFO expense
|
27.6
|
|
|
25.2
|
|
|
21.5
|
|
|
13.2
|
|
|
1.9
|
|
|||||
Stock-based compensation expense
|
9.6
|
|
|
8.2
|
|
|
5.0
|
|
|
6.1
|
|
|
8.7
|
|
|||||
Foreign currency transaction (gains) losses, net
|
0.8
|
|
|
(1.8
|
)
|
|
(1.8
|
)
|
|
(0.5
|
)
|
|
1.8
|
|
|||||
Pension termination settlement(b)
|
—
|
|
|
—
|
|
|
17.2
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA (non-GAAP)
|
$
|
190.7
|
|
|
$
|
164.7
|
|
|
$
|
135.7
|
|
|
$
|
152.3
|
|
|
$
|
135.2
|
|
(15)
|
Includes amounts borrowed under our Credit Facility and long-term finance lease obligations.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(1)
|
Remaining gross profit margin, Adjusted EBITDA and operating expenses as a percentage of remaining gross profit are non-GAAP financial measures and should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”). See “Non-GAAP Financial Information” for reconciliation.
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Cash Payment Amount(1)
|
|
Payment Date
|
February 28, 2019
|
|
$0.11
|
|
March 12, 2019
|
|
$5.1
|
|
March 22, 2019
|
May 7, 2019
|
|
0.11
|
|
May 23, 2019
|
|
5.1
|
|
June 14, 2019
|
August 6, 2019
|
|
0.11
|
|
August 22, 2019
|
|
5.1
|
|
September 13, 2019
|
November 6, 2019
|
|
0.12
|
|
November 19, 2019
|
|
5.5
|
|
December 13, 2019
|
(1)
|
Includes cash payments on declared dividends and payments made on time-based restricted stock units (“RSUs”) and performance share awards that vested subsequent to the payment date.
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||
|
Increase (Decrease)
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
||||||||||
Net sales
|
$
|
275.2
|
|
|
$
|
16,670.5
|
|
|
100.0
|
%
|
|
—
|
%
|
|
$
|
16,395.3
|
|
|
100.0
|
%
|
|
—
|
%
|
Net sales — Cigarettes
|
(81.8
|
)
|
|
10,892.7
|
|
|
65.3
|
|
|
59.7
|
|
|
10,974.5
|
|
|
66.9
|
|
|
61.2
|
|
|||
Net sales — Food/Non-food
|
357.0
|
|
|
5,777.8
|
|
|
34.7
|
|
|
40.3
|
|
|
5,420.8
|
|
|
33.1
|
|
|
38.8
|
|
|||
Net sales, less excise taxes (non-GAAP)(2)
|
425.3
|
|
|
13,329.2
|
|
|
80.0
|
|
|
100.0
|
|
|
12,903.9
|
|
|
78.7
|
|
|
100.0
|
|
|||
Gross profit(3)(4)
|
56.7
|
|
|
924.2
|
|
|
5.5
|
|
|
6.9
|
|
|
867.5
|
|
|
5.3
|
|
|
6.7
|
|
|||
Warehousing and distribution expenses
|
25.6
|
|
|
566.2
|
|
|
3.4
|
|
|
4.2
|
|
|
540.6
|
|
|
3.3
|
|
|
4.2
|
|
|||
Selling, general and administrative expenses
|
10.3
|
|
|
255.4
|
|
|
1.5
|
|
|
1.9
|
|
|
245.1
|
|
|
1.5
|
|
|
1.9
|
|
|||
Amortization of intangible assets
|
—
|
|
|
10.0
|
|
|
0.1
|
|
|
0.1
|
|
|
10.0
|
|
|
0.1
|
|
|
0.1
|
|
|||
Income from operations
|
20.8
|
|
|
92.6
|
|
|
0.6
|
|
|
0.7
|
|
|
71.8
|
|
|
0.4
|
|
|
0.6
|
|
|||
Interest expense, net
|
0.7
|
|
|
(14.4
|
)
|
|
0.1
|
|
|
0.1
|
|
|
(13.7
|
)
|
|
0.1
|
|
|
0.1
|
|
|||
Foreign currency transaction (losses) gains, net
|
(2.6
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|||
Income before taxes
|
17.5
|
|
|
77.4
|
|
|
0.5
|
|
|
0.6
|
|
|
59.9
|
|
|
0.4
|
|
|
0.5
|
|
|||
Provision for income taxes
|
5.3
|
|
|
(19.7
|
)
|
|
0.1
|
|
|
0.1
|
|
|
(14.4
|
)
|
|
0.1
|
|
|
0.1
|
|
|||
Net income
|
12.2
|
|
|
57.7
|
|
|
0.3
|
|
|
0.4
|
|
|
45.5
|
|
|
0.3
|
|
|
0.4
|
|
|||
Adjusted EBITDA
(non-GAAP)(5)
|
26.0
|
|
|
190.7
|
|
|
1.1
|
|
|
1.4
|
|
|
164.7
|
|
|
1.0
|
|
|
1.3
|
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
See the reconciliation of net sales less excise taxes to net sales in “Non-GAAP Financial Information.”
|
(3)
|
Gross profit may not be comparable to those of other entities because warehousing and distribution expenses are not included as a component of our cost of goods sold.
|
(4)
|
Gross profit for 2019 includes LIFO expense of $27.6 million compared to $25.2 million in 2018.
|
(5)
|
See the reconciliation of Adjusted EBITDA to net income in “Non-GAAP Financial Information.”
|
|
2019
|
|
2018
|
|
Increase
|
|||||||||
Product Category
|
Net Sales
|
|
Net Sales
|
|
Amounts
|
|
Percentage
|
|||||||
Food
|
$
|
1,746.4
|
|
|
$
|
1,659.0
|
|
|
$
|
87.4
|
|
|
5.3
|
%
|
Fresh
|
502.8
|
|
|
474.2
|
|
|
28.6
|
|
|
6.0
|
%
|
|||
Candy
|
1,039.0
|
|
|
992.0
|
|
|
47.0
|
|
|
4.7
|
%
|
|||
OTP
|
1,438.9
|
|
|
1,387.2
|
|
|
51.7
|
|
|
3.7
|
%
|
|||
Health, beauty & general
|
847.2
|
|
|
711.5
|
|
|
135.7
|
|
|
19.1
|
%
|
|||
Beverages
|
202.1
|
|
|
191.0
|
|
|
11.1
|
|
|
5.8
|
%
|
|||
Equipment/other
|
1.4
|
|
|
5.9
|
|
|
(4.5
|
)
|
|
N/A
|
|
|||
Total food/non-food products
|
$
|
5,777.8
|
|
|
$
|
5,420.8
|
|
|
$
|
357.0
|
|
|
6.6
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||
|
Increase (Decrease) in Gross Profit
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
|
Amounts
|
|
% of Net sales
|
|
% of Net sales, less excise taxes
|
||||||||||
Net sales
|
$
|
275.2
|
|
|
$
|
16,670.5
|
|
|
100.0
|
%
|
|
—
|
%
|
|
$
|
16,395.3
|
|
|
100.0
|
%
|
|
—
|
%
|
Net sales, less excise taxes
(non-GAAP)(2)
|
425.3
|
|
|
13,329.2
|
|
|
80.0
|
|
|
100.0
|
|
|
12,903.9
|
|
|
78.7
|
|
|
100.0
|
|
|||
Components of gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cigarette inventory holding gains(3)
|
$
|
3.4
|
|
|
$
|
23.0
|
|
|
0.14
|
%
|
|
0.17
|
%
|
|
$
|
19.6
|
|
|
0.12
|
%
|
|
0.15
|
%
|
Other inventory holding gains(4)
|
(0.5
|
)
|
|
6.9
|
|
|
0.04
|
|
|
0.05
|
|
|
7.4
|
|
|
0.05
|
|
|
0.06
|
|
|||
LIFO expense(5)
|
(2.4
|
)
|
|
(27.6
|
)
|
|
(0.17
|
)
|
|
(0.21
|
)
|
|
(25.2
|
)
|
|
(0.15
|
)
|
|
(0.20
|
)
|
|||
Remaining gross profit
(non-GAAP)(6)
|
56.2
|
|
|
921.9
|
|
|
5.53
|
|
|
6.92
|
|
|
865.7
|
|
|
5.28
|
|
|
6.71
|
|
|||
Gross profit
|
$
|
56.7
|
|
|
$
|
924.2
|
|
|
5.54
|
%
|
|
6.93
|
%
|
|
$
|
867.5
|
|
|
5.29
|
%
|
|
6.72
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
See the reconciliation of net sales, less excise taxes to net sales in “Non-GAAP Financial Information.”
|
(3)
|
In 2019, $21.3 million and $1.7 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. In 2018, $17.3 million and $2.3 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively.
|
(4)
|
In 2019, we recognized $6.9 million of candy inventory holding gains which were attributable to the U.S. In 2018, other holding gains consisted of a $7.4 million cigarette tax stamp inventory holding gain attributable to the U.S.
|
(5)
|
The increase of $2.4 million in LIFO expense in 2019 was due primarily to an increase in the Producer Price Index (“PPI”) for cigarettes and an increase in inventory levels (see Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements).
|
(6)
|
Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette inventory holding gains, cigarette tax stamp inventory holding gains and other items that significantly affect the comparability of gross profit (see reconciliation of remaining gross profit to gross profit in “Non-GAAP Financial Information.”)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
57.7
|
|
|
$
|
45.5
|
|
|
$
|
33.5
|
|
Interest expense, net(1)
|
14.4
|
|
|
13.7
|
|
|
11.0
|
|
|||
Provision (benefit) for income taxes
|
19.7
|
|
|
14.4
|
|
|
(5.1
|
)
|
|||
Depreciation and amortization
|
60.9
|
|
|
59.5
|
|
|
54.4
|
|
|||
LIFO expense
|
27.6
|
|
|
25.2
|
|
|
21.5
|
|
|||
Stock-based compensation expense
|
9.6
|
|
|
8.2
|
|
|
5.0
|
|
|||
Foreign currency transaction losses (gains), net
|
0.8
|
|
|
(1.8
|
)
|
|
(1.8
|
)
|
|||
Pension termination settlement
|
—
|
|
|
—
|
|
|
17.2
|
|
|||
Adjusted EBITDA (non-GAAP)
|
$
|
190.7
|
|
|
$
|
164.7
|
|
|
$
|
135.7
|
|
(1)
|
Interest expense, net, is reported net of interest income.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
$
|
16,670.5
|
|
|
$
|
16,395.3
|
|
|
$
|
15,687.6
|
|
Excise taxes(2)
|
|
(3,341.3
|
)
|
|
(3,491.4
|
)
|
|
(3,462.6
|
)
|
|||
Net sales, less excise taxes (non-GAAP)
|
|
$
|
13,329.2
|
|
|
$
|
12,903.9
|
|
|
$
|
12,225.0
|
|
|
|
|
|
|
|
|
||||||
Gross profit(3)(4)
|
|
$
|
924.2
|
|
|
$
|
867.5
|
|
|
$
|
791.7
|
|
Cigarette inventory holding gains
|
|
(23.0
|
)
|
|
(19.6
|
)
|
|
(16.1
|
)
|
|||
Other inventory holding gains(5)
|
|
(6.9
|
)
|
|
(7.4
|
)
|
|
—
|
|
|||
OTP tax items(6)
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|||
LIFO expense
|
|
27.6
|
|
|
25.2
|
|
|
21.5
|
|
|||
Remaining gross profit (non-GAAP)
|
|
$
|
921.9
|
|
|
$
|
865.7
|
|
|
$
|
793.2
|
|
|
|
|
|
|
|
|
||||||
Gross profit %
|
|
5.54
|
%
|
|
5.29
|
%
|
|
5.05
|
%
|
|||
Gross profit % less excise taxes (non-GAAP)
|
|
6.93
|
%
|
|
6.72
|
%
|
|
6.48
|
%
|
|||
Remaining gross profit % (non-GAAP)
|
|
5.53
|
%
|
|
5.28
|
%
|
|
5.06
|
%
|
|||
Remaining gross profit % less excise taxes (non-GAAP)
|
|
6.92
|
%
|
|
6.71
|
%
|
|
6.49
|
%
|
|
|
Year Ended December 31,
|
||||||||||
Cigarettes:
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
$
|
10,892.7
|
|
|
$
|
10,974.5
|
|
|
$
|
10,887.4
|
|
Excise taxes(2)
|
|
(2,929.6
|
)
|
|
(3,082.4
|
)
|
|
(3,094.3
|
)
|
|||
Net sales, less excise taxes (non-GAAP)
|
|
$
|
7,963.1
|
|
|
$
|
7,892.1
|
|
|
$
|
7,793.1
|
|
|
|
|
|
|
|
|
||||||
Gross profit(3)
|
|
$
|
212.4
|
|
|
$
|
225.6
|
|
|
$
|
213.8
|
|
Cigarette inventory holding gains
|
|
(23.0
|
)
|
|
(19.6
|
)
|
|
(16.1
|
)
|
|||
Other inventory holding gains(5)
|
|
—
|
|
|
(7.4
|
)
|
|
—
|
|
|||
LIFO expense
|
|
24.2
|
|
|
22.1
|
|
|
17.5
|
|
|||
Remaining gross profit (non-GAAP)
|
|
$
|
213.6
|
|
|
$
|
220.7
|
|
|
$
|
215.2
|
|
|
|
|
|
|
|
|
||||||
Gross profit %
|
|
1.95
|
%
|
|
2.06
|
%
|
|
1.96
|
%
|
|||
Gross profit % less excise taxes (non-GAAP)
|
|
2.67
|
%
|
|
2.86
|
%
|
|
2.74
|
%
|
|||
Remaining gross profit % (non-GAAP)
|
|
1.96
|
%
|
|
2.01
|
%
|
|
1.98
|
%
|
|||
Remaining gross profit % less excise taxes (non-GAAP)
|
|
2.68
|
%
|
|
2.80
|
%
|
|
2.76
|
%
|
|
|
Year Ended December 31,
|
||||||||||
Food/Non-food:
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
$
|
5,777.8
|
|
|
$
|
5,420.8
|
|
|
$
|
4,800.2
|
|
Excise taxes(2)
|
|
(411.7
|
)
|
|
(409.0
|
)
|
|
(368.3
|
)
|
|||
Net sales, less excise taxes (non-GAAP)
|
|
$
|
5,366.1
|
|
|
$
|
5,011.8
|
|
|
$
|
4,431.9
|
|
|
|
|
|
|
|
|
||||||
Gross profit(4)
|
|
$
|
711.8
|
|
|
$
|
641.9
|
|
|
$
|
577.9
|
|
Other inventory holding gains(5)
|
|
(6.9
|
)
|
|
—
|
|
|
—
|
|
|||
OTP tax items(6)
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|||
LIFO expense
|
|
3.4
|
|
|
3.1
|
|
|
4.0
|
|
|||
Remaining gross profit (non-GAAP)
|
|
$
|
708.3
|
|
|
$
|
645.0
|
|
|
$
|
578.0
|
|
|
|
|
|
|
|
|
||||||
Gross profit %
|
|
12.32
|
%
|
|
11.84
|
%
|
|
12.04
|
%
|
|||
Gross profit % less excise taxes (non-GAAP)
|
|
13.26
|
%
|
|
12.81
|
%
|
|
13.04
|
%
|
|||
Remaining gross profit % (non-GAAP)
|
|
12.26
|
%
|
|
11.90
|
%
|
|
12.04
|
%
|
|||
Remaining gross profit % less excise taxes (non-GAAP)
|
|
13.20
|
%
|
|
12.87
|
%
|
|
13.04
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and might differ from unrounded results.
|
(2)
|
Excise taxes included in our net sales consist of state, local and provincial excise taxes, for which we are the primary obligor and held responsible for remitting to the appropriate tax authorities. Federal excise taxes are levied on the manufacturers who pass the tax on to us as part of the product cost and thus are not a component of our excise taxes. Although increases in cigarette excise taxes result in higher net sales, our overall gross profit percentage may be reduced since gross profit dollars generally remain the same.
|
(3)
|
Cigarette gross profit includes (i) cigarette inventory holding gains related to manufacturer price increases, (ii) increases in state, local and provincial excise taxes and (iii) LIFO effects. Cigarette inventory holding gains for the years 2019, 2018 and 2017 were $23.0 million, $19.6 million and $16.1 million, respectively. For 2018, we recognized a cigarette tax stamp inventory holding gains, in the U.S. of $7.4 million.
|
(4)
|
Food/non-food gross profit includes (i) inventory holding gains related to manufacturer price increases, (ii) increases in state, local and provincial excise taxes, (iii) LIFO effects, and (iv) OTP tax refunds of $3.9 million in 2017.
|
(5)
|
In 2019, we recognized $6.9 million of candy inventory holding gains which were attributable to the U.S. In 2018, other holding gains consisted of a $7.4 million cigarette tax stamp inventory holding gain attributable to the U.S.
|
(6)
|
In 2017, the $3.9 million of OTP tax refunds were attributable to the U.S.
|
|
|
Year Ended
|
||||||||||
|
|
December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gross profit
|
|
$
|
924.2
|
|
|
$
|
867.5
|
|
|
$
|
791.7
|
|
Cigarette inventory holding gains(2)
|
|
(23.0
|
)
|
|
(19.6
|
)
|
|
(16.1
|
)
|
|||
Other inventory holding gains(3)
|
|
(6.9
|
)
|
|
(7.4
|
)
|
|
—
|
|
|||
OTP tax items(4)
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|||
LIFO expense
|
|
27.6
|
|
|
25.2
|
|
|
21.5
|
|
|||
Remaining gross profit (non-GAAP)
|
|
$
|
921.9
|
|
|
$
|
865.7
|
|
|
$
|
793.2
|
|
|
|
|
|
|
|
|
||||||
Warehousing and distribution expenses
|
|
$
|
566.2
|
|
|
$
|
540.6
|
|
|
$
|
504.1
|
|
Selling, general and administrative expenses
|
|
255.4
|
|
|
245.1
|
|
|
224.3
|
|
|||
Amortization of intangible assets
|
|
10.0
|
|
|
10.0
|
|
|
8.5
|
|
|||
Total operating expenses
|
|
$
|
831.6
|
|
|
$
|
795.7
|
|
|
$
|
736.9
|
|
|
|
|
|
|
|
|
||||||
Warehouse and distribution expense as a percentage of remaining gross profit (non-GAAP)
|
|
61.4
|
%
|
|
62.4
|
%
|
|
63.6
|
%
|
|||
Selling, general and administrative expense as a percentage of remaining gross profit (non-GAAP)
|
|
27.7
|
%
|
|
28.3
|
%
|
|
28.3
|
%
|
|||
Amortization of intangible assets as a percentage of remaining gross profit (non-GAAP)
|
|
1.1
|
%
|
|
1.2
|
%
|
|
1.1
|
%
|
|||
Total operating expense as a percentage of remaining gross profit (non-GAAP)
|
|
90.2
|
%
|
|
91.9
|
%
|
|
92.9
|
%
|
(1)
|
Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.
|
(2)
|
For the year ended December 31, 2019, $21.3 million and $1.7 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. For the year ended December 31, 2018, $17.3 million and $2.3 million of the cigarette holding gains were attributable to the U.S. and Canada, respectively. For the year ended December 31, 2017, $13.4 million and $2.7 million of the cigarette holding gains were attributable to the U.S. and Canada, respectively.
|
(3)
|
For the year ended December 31, 2019, $6.9 million of the other holding gains consisted of candy inventory holding gains that were attributable to the U.S. For the year ended December 31, 2018, $7.4 million of the other holding gains consisted of a cigarette tax stamp inventory holding gain that was attributable to the U.S.
|
(4)
|
For the year ended December 31, 2017, $3.9 million of the OTP tax refunds were attributable to the U.S.
|
|
|
Year Ended December 31,
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
Accounts receivable, net
|
|
$
|
(5.2
|
)
|
|
$
|
29.0
|
|
|
$
|
(34.2
|
)
|
Other receivables, net
|
|
(6.2
|
)
|
|
4.3
|
|
|
(10.5
|
)
|
|||
Inventories, net
|
|
(5.0
|
)
|
|
(34.4
|
)
|
|
29.4
|
|
|||
Deposits, prepayments and other non-current assets
|
|
(42.9
|
)
|
|
23.6
|
|
|
(66.5
|
)
|
|||
Accounts payable
|
|
(8.6
|
)
|
|
31.0
|
|
|
(39.6
|
)
|
|||
Cigarette and tobacco taxes payable
|
|
(20.0
|
)
|
|
(2.3
|
)
|
|
(17.7
|
)
|
|||
Pension, claims, accrued and other long-term liabilities
|
|
17.7
|
|
|
17.8
|
|
|
(0.1
|
)
|
|||
Net cash (used in) provided by changes in operating assets and liabilities
|
|
$
|
(70.2
|
)
|
|
$
|
69.0
|
|
|
$
|
(139.2
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Amounts borrowed, net
|
$
|
324.8
|
|
|
$
|
320.0
|
|
Outstanding letters of credit
|
16.7
|
|
|
16.7
|
|
||
Amounts available to borrow(1)
|
341.7
|
|
|
328.9
|
|
||
Average borrowings for the year(2)
|
303.2
|
|
|
336.8
|
|
||
Range of borrowings for the year
|
141.7 - 508.0
|
|
|
175.0 - 575.0
|
|
(1)
|
Subject to borrowing base limitations, and excluding expansion feature of $200.0 million.
|
(2)
|
See Liquidity and Capital Resources for additional details on the decrease in average borrowings.
|
|
Total
|
|
Less than 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More than 5 Years
|
||||||||||
Credit Facility(1)
|
$
|
324.8
|
|
|
$
|
—
|
|
|
$
|
324.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Purchase obligations(2)
|
19.6
|
|
|
5.0
|
|
|
10.0
|
|
|
4.6
|
|
|
—
|
|
|||||
Letters of credit
|
16.7
|
|
|
16.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases(3)
|
256.2
|
|
|
48.5
|
|
|
75.4
|
|
|
48.2
|
|
|
84.1
|
|
|||||
Finance leases(4)
|
78.9
|
|
|
11.4
|
|
|
21.3
|
|
|
20.2
|
|
|
26.0
|
|
|||||
Total contractual obligations(5)
|
$
|
696.2
|
|
|
$
|
81.6
|
|
|
$
|
431.5
|
|
|
$
|
73.0
|
|
|
$
|
110.1
|
|
(1)
|
Represents amounts borrowed under our Credit Facility and does not include interest costs associated with the Credit Facility due to the variation of outstanding debt at Prime-based or LIBOR-based interest rates. See Our Credit Facility above.
|
(2)
|
Our purchase obligations at December 31, 2019 were related primarily to purchases of compressed natural gas for our trucking fleet, delivery and warehouse equipment, computer software and services, and leasehold improvements (see Note 10 - Commitments and Contingencies to our consolidated financial statements).
|
(3)
|
The majority of our sales offices, warehouse facilities and trucks are subject to lease agreements which expire at various dates through 2034, excluding renewal options. We are generally required to incur maintenance, insurance and property tax expenses in connection with our lease agreements. In most instances, we expect the leases that expire will be renewed or replaced in the normal course of our business.
|
(4)
|
Represents net future minimum lease payments for warehouse facilities and other office, vehicle and warehouse equipment. Current maturities of finance leases are included in accrued liabilities and non-current maturities are included in long-term debt. Interest costs associated with the finance leases are included in the table above.
|
(5)
|
We have not included in the table above gross claims liabilities of $56.5 million, which includes workers’ compensation, health and welfare, and general and auto liabilities because they do not have a definite payout by year. See Critical Accounting Policies and Estimates - Claims Liabilities and Insurance Recoverables. See also Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Current
|
|
Long-Term
|
|
Total
|
|
Current
|
|
Long-Term
|
|
Total
|
||||||||||||
Gross claims liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workers’ compensation
|
$
|
8.5
|
|
|
$
|
26.6
|
|
|
$
|
35.1
|
|
|
$
|
7.9
|
|
|
$
|
22.9
|
|
|
$
|
30.8
|
|
Auto and general insurance
|
6.8
|
|
|
9.5
|
|
|
16.3
|
|
|
4.2
|
|
|
7.3
|
|
|
11.5
|
|
||||||
Health and welfare
|
5.1
|
|
|
—
|
|
|
5.1
|
|
|
4.3
|
|
|
—
|
|
|
4.3
|
|
||||||
Total gross claims liabilities
|
$
|
20.4
|
|
|
$
|
36.1
|
|
|
$
|
56.5
|
|
|
$
|
16.4
|
|
|
$
|
30.2
|
|
|
$
|
46.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance recoverables
|
$
|
(3.1
|
)
|
|
$
|
(14.4
|
)
|
|
$
|
(17.5
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
(11.3
|
)
|
|
$
|
(13.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Reserves, net:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workers’ compensation
|
$
|
7.3
|
|
|
$
|
16.4
|
|
|
$
|
23.7
|
|
|
$
|
6.8
|
|
|
$
|
14.4
|
|
|
$
|
21.2
|
|
Auto and general insurance
|
4.9
|
|
|
5.3
|
|
|
10.2
|
|
|
3.1
|
|
|
4.5
|
|
|
7.6
|
|
||||||
Health and welfare
|
5.1
|
|
|
—
|
|
|
5.1
|
|
|
4.3
|
|
|
—
|
|
|
4.3
|
|
||||||
Reserves, net
|
$
|
17.3
|
|
|
$
|
21.7
|
|
|
$
|
39.0
|
|
|
$
|
14.2
|
|
|
$
|
18.9
|
|
|
$
|
33.1
|
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
|
(a) Financial Statements filed as part of this Annual Report on Form 10-K
|
|
|
|
1. Financial Statements
|
|
|
|
A. Audited Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
We tested the effectiveness of controls over management’s review and determination of the asset groups.
|
•
|
We evaluated the reasonableness of management’s asset group determination by assessing the basis for the identification of the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities and considering the relevant criteria specified by the accounting standards.
|
•
|
We tested management’s revenue dependency analysis, including the inter-dependencies of customers serviced by multiple distribution centers and assessed the reasonableness of the Company’s asset groupings.
|
/s/ Deloitte & Touche LLP
|
|
Dallas, Texas
|
|
March 2, 2020
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
14.1
|
|
|
$
|
27.3
|
|
Accounts receivable, net of allowance for doubtful accounts of $14.5 and $8.3 at December 31, 2019 and 2018, respectively (Note 4)
|
402.9
|
|
|
403.5
|
|
||
Other receivables, net (Note 4)
|
96.2
|
|
|
89.4
|
|
||
Inventories, net (Note 5)
|
670.9
|
|
|
689.0
|
|
||
Deposits and prepayments (Note 4)
|
116.0
|
|
|
78.8
|
|
||
Total current assets
|
1,300.1
|
|
|
1,288.0
|
|
||
Property and equipment, net (Note 6)
|
249.9
|
|
|
229.0
|
|
||
Operating lease right-of-use assets (Note 7)
|
199.8
|
|
|
—
|
|
||
Goodwill (Note 8)
|
72.8
|
|
|
72.8
|
|
||
Other intangible assets, net (Note 8)
|
47.2
|
|
|
51.1
|
|
||
Other non-current assets, net (Note 4)
|
28.6
|
|
|
25.2
|
|
||
Total assets
|
$
|
1,898.4
|
|
|
$
|
1,666.1
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
192.2
|
|
|
$
|
199.8
|
|
Book overdrafts (Note 2)
|
23.9
|
|
|
49.4
|
|
||
Cigarette and tobacco taxes payable
|
280.1
|
|
|
297.8
|
|
||
Operating lease liabilities (Note 7)
|
39.5
|
|
|
—
|
|
||
Accrued liabilities (Note 4)
|
151.0
|
|
|
134.0
|
|
||
Total current liabilities
|
686.7
|
|
|
681.0
|
|
||
Long-term debt (Note 9)
|
382.1
|
|
|
346.2
|
|
||
Deferred income taxes (Note 11)
|
22.6
|
|
|
27.1
|
|
||
Long-term operating lease liabilities (Note 7)
|
173.4
|
|
|
—
|
|
||
Other long-term liabilities
|
5.6
|
|
|
14.6
|
|
||
Claims liabilities (Note 2)
|
36.1
|
|
|
30.2
|
|
||
Total liabilities
|
1,306.5
|
|
|
1,099.1
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
||||
Stockholders’ equity (Note 15):
|
|
|
|
||||
Common stock, $0.01 par value (150,000,000 shares authorized; 52,702,551 and 52,524,853 shares issued; 45,113,722 and 45,703,705 shares outstanding at December 31, 2019 and 2018, respectively)
|
0.5
|
|
|
0.5
|
|
||
Additional paid-in capital
|
290.6
|
|
|
283.3
|
|
||
Treasury stock at cost (7,588,829 and 6,821,148 shares of common stock at December 31, 2019 and 2018, respectively)
|
(112.6
|
)
|
|
(90.6
|
)
|
||
Retained earnings
|
418.5
|
|
|
381.6
|
|
||
Accumulated other comprehensive loss (Note 16)
|
(5.1
|
)
|
|
(7.8
|
)
|
||
Total stockholders’ equity
|
591.9
|
|
|
567.0
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,898.4
|
|
|
$
|
1,666.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
16,670.5
|
|
|
$
|
16,395.3
|
|
|
$
|
15,687.6
|
|
Cost of goods sold
|
15,746.3
|
|
|
15,527.8
|
|
|
14,895.9
|
|
|||
Gross profit
|
924.2
|
|
|
867.5
|
|
|
791.7
|
|
|||
Warehousing and distribution expenses
|
566.2
|
|
|
540.6
|
|
|
504.1
|
|
|||
Selling, general and administrative expenses
|
255.4
|
|
|
245.1
|
|
|
224.3
|
|
|||
Amortization of intangible assets
|
10.0
|
|
|
10.0
|
|
|
8.5
|
|
|||
Total operating expenses
|
831.6
|
|
|
795.7
|
|
|
736.9
|
|
|||
Income from operations
|
92.6
|
|
|
71.8
|
|
|
54.8
|
|
|||
Interest expense, net
|
(14.4
|
)
|
|
(13.7
|
)
|
|
(11.0
|
)
|
|||
Foreign currency transaction (losses) gains, net
|
(0.8
|
)
|
|
1.8
|
|
|
1.8
|
|
|||
Pension termination settlement (Note 12)
|
—
|
|
|
—
|
|
|
(17.2
|
)
|
|||
Income before income taxes
|
77.4
|
|
|
59.9
|
|
|
28.4
|
|
|||
(Provision) benefit for income taxes (Note 11)
|
(19.7
|
)
|
|
(14.4
|
)
|
|
5.1
|
|
|||
Net income
|
$
|
57.7
|
|
|
$
|
45.5
|
|
|
$
|
33.5
|
|
|
|
|
|
|
|
||||||
Earnings per share (Note 13):
|
|
|
|
|
|
||||||
Basic
|
$
|
1.26
|
|
|
$
|
0.99
|
|
|
$
|
0.72
|
|
Diluted
|
$
|
1.25
|
|
|
$
|
0.99
|
|
|
$
|
0.72
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding (Note 13):
|
|
|
|
|
|
||||||
Basic
|
45.7
|
|
|
46.0
|
|
|
46.3
|
|
|||
Diluted
|
46.0
|
|
|
46.1
|
|
|
46.4
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
57.7
|
|
|
$
|
45.5
|
|
|
$
|
33.5
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Defined benefit plan adjustments (Note 16)
|
(0.2
|
)
|
|
(0.2
|
)
|
|
11.0
|
|
|||
Foreign currency translation gain (loss), net (Note 16)
|
2.9
|
|
|
(5.5
|
)
|
|
1.1
|
|
|||
Other comprehensive income (loss), net of tax
|
2.7
|
|
|
(5.7
|
)
|
|
12.1
|
|
|||
Comprehensive income
|
$
|
60.4
|
|
|
$
|
39.8
|
|
|
$
|
45.6
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Total stockholders’ equity, beginning balances
|
|
$
|
567.0
|
|
|
$
|
555.2
|
|
|
$
|
529.8
|
|
|
|
|
|
|
|
|
||||||
Common stock:
|
|
|
|
|
|
|
||||||
Beginning and ending balances
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
|
|
|
|
|
|
||||||
Additional paid-in capital:
|
|
|
|
|
|
|
||||||
Beginning balances
|
|
$
|
283.3
|
|
|
$
|
276.8
|
|
|
$
|
275.5
|
|
Common stock issued, net of shares withheld for employee taxes
|
|
(2.3
|
)
|
|
(1.7
|
)
|
|
(3.7
|
)
|
|||
Stock-based compensation expense
|
|
9.6
|
|
|
8.2
|
|
|
5.0
|
|
|||
Ending balances
|
|
$
|
290.6
|
|
|
$
|
283.3
|
|
|
$
|
276.8
|
|
|
|
|
|
|
|
|
||||||
Treasury stock:
|
|
|
|
|
|
|
||||||
Beginning balances
|
|
$
|
(90.6
|
)
|
|
$
|
(75.1
|
)
|
|
$
|
(70.7
|
)
|
Repurchase of common stock
|
|
(22.0
|
)
|
|
(15.5
|
)
|
|
(4.4
|
)
|
|||
Ending balances
|
|
$
|
(112.6
|
)
|
|
$
|
(90.6
|
)
|
|
$
|
(75.1
|
)
|
|
|
|
|
|
|
|
||||||
Retained earnings:
|
|
|
|
|
|
|
||||||
Beginning balances
|
|
$
|
381.6
|
|
|
$
|
355.1
|
|
|
$
|
338.7
|
|
Net income
|
|
57.7
|
|
|
45.5
|
|
|
33.5
|
|
|||
Dividends declared
|
|
(20.8
|
)
|
|
(19.0
|
)
|
|
(17.1
|
)
|
|||
Ending balances
|
|
$
|
418.5
|
|
|
$
|
381.6
|
|
|
$
|
355.1
|
|
|
|
|
|
|
|
|
||||||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
||||||
Beginning balances
|
|
$
|
(7.8
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
(14.2
|
)
|
Other comprehensive gain (loss)
|
|
2.7
|
|
|
(5.7
|
)
|
|
12.1
|
|
|||
Ending balances
|
|
$
|
(5.1
|
)
|
|
$
|
(7.8
|
)
|
|
$
|
(2.1
|
)
|
|
|
|
|
|
|
|
||||||
Total stockholders’ equity, ending balances
|
|
$
|
591.9
|
|
|
$
|
567.0
|
|
|
$
|
555.2
|
|
|
|
|
|
|
|
|
||||||
Common stock shares:
|
|
|
|
|
|
|
||||||
Beginning share balance
|
|
52.5
|
|
|
52.4
|
|
|
52.2
|
|
|||
Common stock issued, net of shares withheld for employee taxes
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
|||
Ending share balance
|
|
52.7
|
|
|
52.5
|
|
|
52.4
|
|
|||
|
|
|
|
|
|
|
||||||
Treasury stock shares:
|
|
|
|
|
|
|
||||||
Beginning share balance
|
|
(6.8
|
)
|
|
(6.2
|
)
|
|
(6.0
|
)
|
|||
Repurchase of common stock
|
|
(0.8
|
)
|
|
(0.6
|
)
|
|
(0.2
|
)
|
|||
Ending share balance
|
|
(7.6
|
)
|
|
(6.8
|
)
|
|
(6.2
|
)
|
|||
|
|
|
|
|
|
|
||||||
Total shares outstanding
|
|
45.1
|
|
|
45.7
|
|
|
46.2
|
|
|||
|
|
|
|
|
|
|
||||||
Dividends declared per share
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
0.37
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
57.7
|
|
|
$
|
45.5
|
|
|
$
|
33.5
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
LIFO and inventory provisions
|
27.7
|
|
|
25.9
|
|
|
21.3
|
|
|||
Amortization of debt issuance costs
|
0.8
|
|
|
0.8
|
|
|
0.8
|
|
|||
Stock-based compensation expense
|
9.6
|
|
|
8.2
|
|
|
5.0
|
|
|||
Bad debt expense, net
|
7.1
|
|
|
3.6
|
|
|
1.1
|
|
|||
Loss (gain) on disposals
|
—
|
|
|
0.6
|
|
|
(0.4
|
)
|
|||
Depreciation and amortization
|
60.9
|
|
|
59.5
|
|
|
54.4
|
|
|||
Foreign currency transaction losses (gains)
|
0.8
|
|
|
(1.8
|
)
|
|
(1.8
|
)
|
|||
Deferred income taxes
|
(4.7
|
)
|
|
(0.1
|
)
|
|
2.0
|
|
|||
Pension termination settlement
|
—
|
|
|
—
|
|
|
17.2
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(5.2
|
)
|
|
29.0
|
|
|
(32.7
|
)
|
|||
Other receivables, net
|
(6.2
|
)
|
|
4.3
|
|
|
8.0
|
|
|||
Inventories, net
|
(5.0
|
)
|
|
(34.4
|
)
|
|
(70.5
|
)
|
|||
Deposits, prepayments and other non-current assets
|
(42.9
|
)
|
|
23.6
|
|
|
(16.9
|
)
|
|||
Accounts payable
|
(8.6
|
)
|
|
31.0
|
|
|
50.2
|
|
|||
Cigarette and tobacco taxes payable
|
(20.0
|
)
|
|
(2.3
|
)
|
|
40.7
|
|
|||
Claims, accrued and other long-term liabilities
|
17.7
|
|
|
17.8
|
|
|
(18.3
|
)
|
|||
Net cash provided by operating activities
|
89.7
|
|
|
211.2
|
|
|
93.6
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of business, net of cash acquired
|
(2.5
|
)
|
|
(2.5
|
)
|
|
(169.0
|
)
|
|||
Additions to property and equipment, net
|
(22.8
|
)
|
|
(20.1
|
)
|
|
(48.2
|
)
|
|||
Capitalization of software and related development costs
|
(6.0
|
)
|
|
(2.0
|
)
|
|
(4.4
|
)
|
|||
Proceeds from sale of property and equipment
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(31.0
|
)
|
|
(24.4
|
)
|
|
(221.6
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Borrowings under revolving credit facility
|
1,692.6
|
|
|
1,769.9
|
|
|
1,708.6
|
|
|||
Repayments under revolving credit facility
|
(1,687.8
|
)
|
|
(1,938.1
|
)
|
|
(1,556.4
|
)
|
|||
Payments of financing costs
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|||
Payments of finance leases
|
(5.6
|
)
|
|
(3.0
|
)
|
|
(2.1
|
)
|
|||
Dividends paid
|
(20.7
|
)
|
|
(18.9
|
)
|
|
(17.2
|
)
|
|||
Repurchases of common stock
|
(22.0
|
)
|
|
(15.5
|
)
|
|
(4.4
|
)
|
|||
Tax withholdings related to net share settlements of restricted stock units
|
(2.2
|
)
|
|
(1.7
|
)
|
|
(3.7
|
)
|
|||
(Decrease) Increase in book overdrafts, net
|
(25.5
|
)
|
|
4.1
|
|
|
7.4
|
|
|||
Net cash (used in) provided by financing activities
|
(71.2
|
)
|
|
(203.2
|
)
|
|
130.4
|
|
|||
Effects of changes in foreign exchange rates
|
(0.7
|
)
|
|
2.1
|
|
|
(2.5
|
)
|
|||
Change in cash, cash equivalents and restricted cash
|
(13.2
|
)
|
|
(14.3
|
)
|
|
(0.1
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
27.3
|
|
|
41.6
|
|
|
41.7
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
14.1
|
|
|
$
|
27.3
|
|
|
$
|
41.6
|
|
Supplemental disclosures:
|
|
|
|
|
|
||||||
Cash received (paid) during the period for:
|
|
|
|
|
|
||||||
Income taxes, net
|
$
|
(18.7
|
)
|
|
$
|
10.1
|
|
|
$
|
(16.7
|
)
|
Interest paid
|
$
|
(12.0
|
)
|
|
$
|
(13.0
|
)
|
|
$
|
(9.2
|
)
|
Non-cash indemnification holdback
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.0
|
|
Unpaid property and equipment purchases included in accrued liabilities
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
1.6
|
|
Non-cash transactions between other non-current assets and other long-term liabilities
|
$
|
4.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1.
|
Summary of Company Information and Basis of Presentation
|
2.
|
Summary of Significant Accounting Policies
|
•
|
Level 1 - Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
|
•
|
Level 3 - Unobservable inputs for the asset or liability, which reflect the Company’s own assumptions about what market participants would assume when pricing the asset or liability.
|
|
Useful Life in Years
|
Office furniture and equipment
|
3-10
|
Delivery equipment
|
4-10
|
Warehouse equipment
|
5-15
|
Leasehold improvements
|
3-25
|
Buildings
|
15-25
|
|
Useful Life in Years
|
Customer relationships
|
9-15
|
Non-competition agreements
|
1-5
|
Trade names
|
1-2
|
Internally developed and other purchased software
|
3-7
|
|
July 10, 2017
|
||
Accounts receivable
|
$
|
43.2
|
|
Inventories
|
35.5
|
|
|
Deposits and prepayments
|
10.2
|
|
|
Other receivables
|
0.4
|
|
|
Property and equipment
|
43.1
|
|
|
Goodwill (tax deductible)
|
36.8
|
|
|
Other intangible assets
|
22.6
|
|
|
Less: Capital lease liability
|
(15.8
|
)
|
|
Less: Accrued liabilities
|
(2.0
|
)
|
|
Total consideration
|
$
|
174.0
|
|
|
Fair Value
|
|
Useful Life in Years
|
||
Customer relationships
|
$
|
19.7
|
|
|
9-11
|
Non-competition agreements
|
0.1
|
|
|
4-6
|
|
Trade names
|
2.8
|
|
|
1-2
|
|
Total other intangible assets
|
$
|
22.6
|
|
|
|
(1)
|
Includes consolidated results of Farner-Bocken.
|
4.
|
Other Consolidated Balance Sheet Accounts Detail
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning of year
|
$
|
8.3
|
|
|
$
|
7.3
|
|
|
$
|
7.1
|
|
Net additions charged to operations(1)
|
7.1
|
|
|
3.6
|
|
|
1.1
|
|
|||
Less: Write-offs and adjustments
|
(0.9
|
)
|
|
(2.6
|
)
|
|
(0.9
|
)
|
|||
Balance, end of year
|
$
|
14.5
|
|
|
$
|
8.3
|
|
|
$
|
7.3
|
|
(1)
|
The net additions to the allowance for doubtful accounts were recognized in the consolidated statements of operations as a component of the Company’s selling, general and administrative expenses.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Vendor receivables, net
|
$
|
73.1
|
|
|
$
|
72.7
|
|
Insurance recoverables, current
|
3.1
|
|
|
2.2
|
|
||
Other miscellaneous receivables(1)
|
20.0
|
|
|
14.5
|
|
||
Total other receivables, net
|
$
|
96.2
|
|
|
$
|
89.4
|
|
(1)
|
Other miscellaneous receivables include amounts related primarily to notes receivables, miscellaneous tax receivables, receivables from the Company’s third-party logistics customers, and other miscellaneous receivables.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Vendor prepayments
|
$
|
85.8
|
|
|
$
|
45.4
|
|
Prepaid taxes
|
0.5
|
|
|
3.6
|
|
||
Deposits(1)
|
7.0
|
|
|
7.8
|
|
||
Racking allowances, current
|
6.8
|
|
|
6.4
|
|
||
Other prepayments(2)
|
15.9
|
|
|
15.6
|
|
||
Total deposits and prepayments
|
$
|
116.0
|
|
|
$
|
78.8
|
|
(1)
|
Deposits include amounts related primarily to cigarette stamps and workers’ compensation claims.
|
(2)
|
Other prepayments include prepayments relating to insurance policies, software licenses, rent and other miscellaneous prepayments.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Insurance recoverables
|
$
|
14.4
|
|
|
$
|
11.3
|
|
Racking allowances, net
|
3.5
|
|
|
6.7
|
|
||
Insurance deposits
|
3.4
|
|
|
3.5
|
|
||
Debt issuance costs
|
1.0
|
|
|
1.8
|
|
||
Other assets
|
6.3
|
|
|
1.9
|
|
||
Total other non-current assets, net
|
$
|
28.6
|
|
|
$
|
25.2
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued payroll and other benefits(1)
|
$
|
47.7
|
|
|
$
|
40.9
|
|
Accrued customer incentives payable
|
37.3
|
|
|
34.0
|
|
||
Claims liabilities, current
|
20.4
|
|
|
16.4
|
|
||
Indirect taxes
|
9.3
|
|
|
7.2
|
|
||
Vendor advances
|
3.1
|
|
|
3.0
|
|
||
Other accrued expenses(2)
|
33.2
|
|
|
32.5
|
|
||
Total accrued liabilities
|
$
|
151.0
|
|
|
$
|
134.0
|
|
(1)
|
The Company’s accrued payroll and other benefits include accruals for vacation, bonuses, wages and 401(k) benefit matching.
|
(2)
|
The Company’s other accrued expenses include accruals for goods and services, finance lease liabilities, construction in process, legal expenses and other miscellaneous accruals.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Inventories at FIFO, net of reserves
|
$
|
875.6
|
|
|
$
|
866.1
|
|
Less: LIFO reserve
|
(204.7
|
)
|
|
(177.1
|
)
|
||
Total inventories, net of reserves
|
$
|
670.9
|
|
|
$
|
689.0
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Delivery, warehouse and office equipment(1)
|
$
|
409.1
|
|
|
$
|
355.0
|
|
Leasehold improvements
|
87.8
|
|
|
86.4
|
|
||
Land and buildings(2)
|
52.4
|
|
|
50.0
|
|
||
Construction in progress
|
1.0
|
|
|
0.4
|
|
||
|
550.3
|
|
|
491.8
|
|
||
Less: Accumulated depreciation and amortization
|
(300.4
|
)
|
|
(262.8
|
)
|
||
Total property and equipment, net
|
$
|
249.9
|
|
|
$
|
229.0
|
|
(1)
|
Includes equipment finance leases of $56.2 million for 2019 and $19.7 million for 2018.
|
(2)
|
Includes warehouse finance leases of $21.8 million for 2019 and $20.6 million 2018.
|
7.
|
Leases
|
Assets
|
Classification
|
|
December 31,
2019 |
||
Operating
|
Operating lease ROU assets
|
|
$
|
199.8
|
|
Finance
|
Property and equipment, net
|
|
59.8
|
|
|
Total leases
|
|
|
$
|
259.6
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current:
|
|
|
|
||
Operating
|
Operating lease liabilities
|
|
$
|
39.5
|
|
Finance
|
Accrued liabilities
|
|
8.4
|
|
|
Non-current:
|
|
|
|
||
Operating
|
Long-term operating lease liabilities
|
|
173.4
|
|
|
Finance
|
Long-term debt
|
|
57.3
|
|
|
Total lease liabilities
|
|
|
$
|
278.6
|
|
|
|
Year Ended
|
||
|
|
December 31, 2019
|
||
Operating lease cost
|
|
$
|
51.8
|
|
Finance lease cost:
|
|
|
||
Amortization of leased assets
|
|
6.0
|
|
|
Interest on lease liabilities
|
|
2.2
|
|
|
Short-term lease cost
|
|
1.7
|
|
|
Variable lease cost
|
|
20.7
|
|
|
Net lease cost
|
|
$
|
82.4
|
|
|
Operating leases
|
|
Finance leases
|
|
Total
|
||||||
2020
|
$
|
48.5
|
|
|
$
|
11.4
|
|
|
$
|
59.9
|
|
2021
|
41.8
|
|
|
10.7
|
|
|
52.5
|
|
|||
2022
|
33.6
|
|
|
10.6
|
|
|
44.2
|
|
|||
2023
|
26.3
|
|
|
10.3
|
|
|
36.6
|
|
|||
2024
|
21.9
|
|
|
9.9
|
|
|
31.8
|
|
|||
2025 and thereafter
|
84.1
|
|
|
26.0
|
|
|
110.1
|
|
|||
Total lease payments
|
256.2
|
|
|
78.9
|
|
|
335.1
|
|
|||
Less: interest
|
(43.3
|
)
|
|
(13.2
|
)
|
|
(56.5
|
)
|
|||
Present value of lease liabilities
|
$
|
212.9
|
|
|
$
|
65.7
|
|
|
$
|
278.6
|
|
Lease term
|
|
|
|
December 31,
2019 |
|
Weighted-average remaining lease term (years):
|
|
|
|
|
|
Operating
|
|
|
|
7.3
|
|
Finance
|
|
|
|
7.6
|
|
Discount rate
|
|
|
|
|
|
Weighted-average discount rate:
|
|
|
|
|
|
Operating
|
|
|
|
4.9
|
%
|
Finance
|
|
|
|
4.8
|
%
|
Year ending December 31,
|
|
||
2019
|
$
|
61.6
|
|
2020
|
56.8
|
|
|
2021
|
48.4
|
|
|
2022
|
38.3
|
|
|
2023
|
29.8
|
|
|
2024 and Thereafter
|
108.6
|
|
|
Total
|
$
|
343.5
|
|
Year ending December 31,
|
|
||
2019
|
$
|
4.7
|
|
2020
|
4.3
|
|
|
2021
|
3.5
|
|
|
2022
|
3.4
|
|
|
2023
|
3.2
|
|
|
2024 and thereafter
|
18.9
|
|
|
Total
|
38.0
|
|
|
Less: interest
|
(8.6
|
)
|
|
Present value of future minimum lease payments
|
29.4
|
|
|
Less: current portion
|
(3.2
|
)
|
|
Non-current portion
|
$
|
26.2
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross
|
|
|
|
Net
|
|
Gross
|
|
|
|
Net
|
||||||||||||
|
Carrying
|
|
Accumulated
|
|
Carrying
|
|
Carrying
|
|
Accumulated
|
|
Carrying
|
||||||||||||
|
Amount
|
|
Amortization
|
|
Amount
|
|
Amount
|
|
Amortization
|
|
Amount
|
||||||||||||
Customer relationships
|
$
|
48.0
|
|
|
$
|
(20.0
|
)
|
|
$
|
28.0
|
|
|
$
|
48.0
|
|
|
$
|
(16.2
|
)
|
|
$
|
31.8
|
|
Non-competition agreements
|
5.0
|
|
|
(4.4
|
)
|
|
0.6
|
|
|
5.0
|
|
|
(4.0
|
)
|
|
1.0
|
|
||||||
Trade names
|
3.8
|
|
|
(3.8
|
)
|
|
—
|
|
|
3.8
|
|
|
(3.1
|
)
|
|
0.7
|
|
||||||
Internally developed and other purchased software
|
42.0
|
|
|
(23.4
|
)
|
|
18.6
|
|
|
36.0
|
|
|
(18.4
|
)
|
|
17.6
|
|
||||||
Total other intangible assets
|
$
|
98.8
|
|
|
$
|
(51.6
|
)
|
|
$
|
47.2
|
|
|
$
|
92.8
|
|
|
$
|
(41.7
|
)
|
|
$
|
51.1
|
|
Year ending December 31,
|
|
||
2020
|
$
|
9.8
|
|
2021
|
9.1
|
|
|
2022
|
8.3
|
|
|
2023
|
5.2
|
|
|
2024
|
4.1
|
|
|
2025 and thereafter
|
10.7
|
|
|
Total
|
$
|
47.2
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Amounts borrowed (Credit Facility)
|
$
|
324.8
|
|
|
$
|
320.0
|
|
Obligations under finance leases
|
57.3
|
|
|
26.2
|
|
||
Total long-term debt
|
$
|
382.1
|
|
|
$
|
346.2
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Amounts borrowed, net
|
$
|
324.8
|
|
|
$
|
320.0
|
|
Outstanding letters of credit
|
16.7
|
|
|
16.7
|
|
||
Amounts available to borrow(1)
|
341.7
|
|
|
328.9
|
|
||
Average borrowings
|
303.2
|
|
|
336.8
|
|
||
Range of borrowings
|
141.7 - 508.0
|
|
|
175.0 - 575.0
|
|
||
Unamortized debt issuance costs
|
1.7
|
|
|
2.5
|
|
||
Weighted-average interest rate(2)
|
3.4
|
%
|
|
3.1
|
%
|
(1)
|
Subject to borrowing base limitations, and excluding expansion feature of $200.0 million.
|
(2)
|
Calculated based on the daily cost of borrowing, reflecting a blend of prime and LIBOR rates.
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Unused credit facility and letter of credit participation(1)
|
$
|
1.2
|
|
|
$
|
1.2
|
|
|
$
|
1.0
|
|
Amortization of debt issuance costs(1)
|
0.8
|
|
|
0.8
|
|
|
0.8
|
|
(1)
|
Included in interest expense, net.
|
10.
|
Commitments and Contingencies
|
11.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
17.4
|
|
|
$
|
10.6
|
|
|
$
|
(2.2
|
)
|
State
|
4.4
|
|
|
3.7
|
|
|
0.9
|
|
|||
Foreign
|
1.8
|
|
|
—
|
|
|
—
|
|
|||
Total current tax provision (benefit)
|
23.6
|
|
|
14.3
|
|
|
(1.3
|
)
|
|||
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(3.1
|
)
|
|
(0.5
|
)
|
|
(5.3
|
)
|
|||
State
|
(0.9
|
)
|
|
0.1
|
|
|
1.4
|
|
|||
Foreign
|
0.1
|
|
|
0.5
|
|
|
0.1
|
|
|||
Total deferred tax (benefit) provision
|
(3.9
|
)
|
|
0.1
|
|
|
(3.8
|
)
|
|||
|
|
|
|
|
|
||||||
Total income tax provision (benefit)
|
$
|
19.7
|
|
|
$
|
14.4
|
|
|
$
|
(5.1
|
)
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Federal income tax provision at the statutory rate
|
$
|
16.2
|
|
|
21.0
|
%
|
|
$
|
12.6
|
|
|
21.0
|
%
|
|
$
|
9.9
|
|
|
35.0
|
%
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
State income taxes, net of federal benefit
|
2.7
|
|
|
3.5
|
|
|
2.6
|
|
|
4.3
|
|
|
1.6
|
|
|
5.7
|
|
|||
Reduction in federal statutory rate(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.6
|
)
|
|
(51.6
|
)
|
|||
Decrease in unrecognized tax benefits (inclusive of
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
related interest and penalty)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(1.0
|
)
|
|||
Effect of foreign operations
|
0.1
|
|
|
0.1
|
|
|
0.5
|
|
|
0.8
|
|
|
0.1
|
|
|
0.4
|
|
|||
Excess tax benefits from stock-based award payments(2)
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
|
(1.5
|
)
|
|
(5.3
|
)
|
|||
Change in valuation allowance
|
1.7
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Tax credits
|
(1.1
|
)
|
|
(1.4
|
)
|
|
(0.7
|
)
|
|
(1.2
|
)
|
|
(0.4
|
)
|
|
(1.4
|
)
|
|||
Adjustments of prior years’ estimates
|
(0.7
|
)
|
|
(0.9
|
)
|
|
(0.5
|
)
|
|
(0.8
|
)
|
|
(0.4
|
)
|
|
(1.4
|
)
|
|||
Other, net
|
0.7
|
|
|
0.9
|
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
0.5
|
|
|
1.6
|
|
|||
Income tax provision (benefit)
|
$
|
19.7
|
|
|
25.5
|
%
|
|
$
|
14.4
|
|
|
24.0
|
%
|
|
$
|
(5.1
|
)
|
|
(18.0
|
)%
|
(1)
|
As a result of the enactment of the TCJA, a $14.6 million net income tax benefit was recorded in the fourth quarter of 2017 due to a one-time revaluation of the Company’s net deferred tax liability.
|
(2)
|
As a result of the adoption of ASU 2016-09, the Company recognized excess tax deficiencies of $0.1 million and $0.2 million in 2019 and 2018, respectively, and an excess tax benefit of $1.5 million in 2017.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Employee benefits, including post-retirement benefits
|
$
|
11.8
|
|
|
$
|
10.3
|
|
Trade and other receivables
|
3.7
|
|
|
2.1
|
|
||
Self-insurance reserves
|
2.6
|
|
|
1.9
|
|
||
Rent expense
|
—
|
|
|
3.4
|
|
||
ROU assets
|
70.0
|
|
|
—
|
|
||
Other
|
3.0
|
|
|
0.9
|
|
||
Subtotal
|
91.1
|
|
|
18.6
|
|
||
Less: valuation allowance
|
(1.7
|
)
|
|
—
|
|
||
Total deferred tax assets
|
$
|
89.4
|
|
|
$
|
18.6
|
|
Deferred tax liabilities:
|
|
|
|
||||
Inventories
|
$
|
13.1
|
|
|
$
|
12.4
|
|
Property and equipment
|
29.1
|
|
|
29.5
|
|
||
ROU liabilities
|
65.3
|
|
|
—
|
|
||
Goodwill and intangibles
|
2.8
|
|
|
2.6
|
|
||
Other
|
1.7
|
|
|
1.2
|
|
||
Total deferred tax liabilities
|
$
|
112.0
|
|
|
$
|
45.7
|
|
|
|
|
|
||||
Net deferred tax liabilities
|
$
|
(22.6
|
)
|
|
$
|
(27.1
|
)
|
|
|
|
|
||||
Tax jurisdiction:
|
|
|
|
||||
Net deferred liability (Canada)
|
$
|
(0.5
|
)
|
|
$
|
(0.4
|
)
|
Net deferred liability (U.S.)
|
$
|
(22.1
|
)
|
|
$
|
(26.7
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
Lapse of statute of limitations
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||
Balance at end of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
12.
|
Employee Benefit Plans
|
13.
|
Earnings Per Share
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings
|
|
|
|
|
|
||||||
Net income
|
$
|
57.7
|
|
|
$
|
45.5
|
|
|
$
|
33.5
|
|
Shares
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding (basic shares)
|
45.7
|
|
|
46.0
|
|
|
46.3
|
|
|||
Adjustment for assumed dilution:
|
|
|
|
|
|
||||||
Restricted stock units
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|||
Performance shares
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Weighted-average shares assuming dilution (diluted shares)
|
46.0
|
|
|
46.1
|
|
|
46.4
|
|
|||
Earnings per share
|
|
|
|
|
|
||||||
Basic(1)
|
$
|
1.26
|
|
|
$
|
0.99
|
|
|
$
|
0.72
|
|
Diluted(1)
|
$
|
1.25
|
|
|
$
|
0.99
|
|
|
$
|
0.72
|
|
(1)
|
Basic and diluted earnings per share (“EPS”) are calculated based on unrounded actual amounts.
|
14.
|
Stock Incentive Plans
|
|
Number of securities to be issued upon vesting of RSUs and performance share awards
|
|
Weighted-average exercise price of vesting of RSUs and performance share awards
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1)
|
||||
2007 Long-Term Incentive Plan(1)
|
1,624
|
|
|
$
|
0.01
|
|
|
—
|
|
2010 Long-Term Incentive Plan(2)
|
667,368
|
|
|
0.01
|
|
|
—
|
|
|
2019 Long-Term Incentive Plan(2)
|
17,086
|
|
|
0.01
|
|
|
3,550,881
|
|
(1)
|
Includes RSUs.
|
(2)
|
Includes RSUs and performance shares.
|
|
|
|
|
December 31, 2018
|
|
Activity during 2019
|
|
December 31, 2019
|
||||||||||||||||||||||||||||||||||||
|
|
|
|
Outstanding
|
|
Granted
|
|
Vested / Exercised
|
|
Canceled/Forfeited
|
|
Outstanding
|
|
Exercisable
|
||||||||||||||||||||||||||||||
Plans
|
|
Securities
|
|
Number
|
|
Price
|
|
Number
|
|
Price
|
|
Number
|
|
Price
|
|
Number
|
|
Price
|
|
Number
|
|
Price
|
|
Number
|
|
Price
|
||||||||||||||||||
2007 LTIP
|
|
RSUs
|
|
1,624
|
|
|
$
|
0.01
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
1,624
|
|
|
$
|
0.01
|
|
|
1,624
|
|
|
$
|
0.01
|
|
2010 LTIP
|
|
RSUs
|
|
453,896
|
|
|
0.01
|
|
|
223,308
|
|
(1)
|
0.01
|
|
|
(203,243
|
)
|
|
0.01
|
|
|
(31,845
|
)
|
|
0.01
|
|
|
442,116
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||||
|
|
Performance shares
|
|
142,011
|
|
|
0.01
|
|
|
144,352
|
|
(2)
|
0.01
|
|
|
(55,676
|
)
|
|
0.01
|
|
|
(5,435
|
)
|
|
0.01
|
|
|
225,252
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||||
2019 LTIP
|
|
RSUs
|
|
—
|
|
|
—
|
|
|
6,927
|
|
(1)
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
6,927
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||||
|
|
Performance shares
|
|
—
|
|
|
—
|
|
|
10,159
|
|
(2)
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
10,159
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
|
|
597,531
|
|
|
|
|
384,746
|
|
|
|
|
(258,919
|
)
|
|
|
|
(37,280
|
)
|
|
|
|
686,078
|
|
|
|
|
1,624
|
|
|
|
(1)
|
Consists of non-performance RSUs.
|
(2)
|
In 2019, the Company awarded a maximum of 154,511 performance shares that would be received if the highest level of performance was achieved. Subsequent to December 31, 2019, all performance shares were earned based upon 2019 performance criteria.
|
|
|
|
|
December 31, 2019
|
||||||||||||||||||
|
|
|
|
Outstanding
|
|
Weighted-Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value(1)
(dollars in thousands)
|
||||||||||||||
Plans
|
|
Securities
|
|
Vested
|
|
Expected to vest(2)
|
|
Vested
|
|
Expected to vest(2)
|
|
Vested
|
|
Expected to vest(2)
|
||||||||
2007 LTIP
|
|
RSUs
|
|
1,624
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
44
|
|
|
$
|
—
|
|
2010 LTIP
|
|
RSUs
|
|
—
|
|
|
426,996
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,606
|
|
||
|
|
Performance shares
|
|
—
|
|
|
222,999
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,061
|
|
||
2019 LTIP
|
|
RSUs
|
|
—
|
|
|
6,690
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
182
|
|
||
|
|
Performance shares
|
|
—
|
|
|
10,057
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
273
|
|
||
Total
|
|
|
|
1,624
|
|
|
666,742
|
|
|
|
|
|
|
$
|
44
|
|
|
$
|
18,122
|
|
(1)
|
Aggregate intrinsic value is calculated based upon the difference between the exercise price of RSUs and the Company’s closing common stock price on December 31, 2019 of $27.19, multiplied by the number of instruments that are vested or expected to vest. RSUs having grant prices greater than the closing stock price noted above are excluded from this calculation.
|
(2)
|
RSUs and performance shares that are expected to vest are net of estimated future forfeitures.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Aggregate intrinsic value of awards vested and exercised:
|
|
|
|
|
|
||||||
RSUs
|
$
|
5.5
|
|
|
$
|
3.8
|
|
|
$
|
6.1
|
|
Performance shares
|
1.6
|
|
|
1.2
|
|
|
5.5
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted-average fair value per share of grants:
|
|
|
|
|
|
||||||
RSUs
|
$
|
29.67
|
|
|
$
|
23.66
|
|
|
$
|
38.37
|
|
Performance shares(1)
|
$
|
29.90
|
|
|
$
|
23.78
|
|
|
N/A
|
|
(1)
|
Of the 154,511 performance shares awarded in 2019, all were earned based upon 2019 performance criteria. Of the 193,006 performance shares awarded in 2018, 141,406 performance shares were earned based upon 2018 performance criteria.
|
15.
|
Stockholders’ Equity
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Cash Payment Amount(1)
|
|
Payment Date
|
February 28, 2019
|
|
$0.11
|
|
March 12, 2019
|
|
$5.1
|
|
March 22, 2019
|
May 7, 2019
|
|
0.11
|
|
May 23, 2019
|
|
5.1
|
|
June 14, 2019
|
August 6, 2019
|
|
0.11
|
|
August 22, 2019
|
|
5.1
|
|
September 13, 2019
|
November 6, 2019
|
|
0.12
|
|
November 19, 2019
|
|
5.5
|
|
December 13, 2019
|
(1)
|
Includes cash payments on declared dividends and payments made on RSUs vested subsequent to the payment date.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Number of shares repurchased
|
767,681
|
|
|
588,489
|
|
|
158,106
|
|
|||
Average price per share
|
$
|
28.66
|
|
|
$
|
26.20
|
|
|
$
|
28.11
|
|
Total repurchase costs(1)
|
$
|
22.0
|
|
|
$
|
15.5
|
|
|
$
|
4.4
|
|
(1)
|
Amounts have been rounded for presentation purposes and may differ from unrounded results.
|
16.
|
Other Comprehensive Income (Loss)
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
|
|
|
|
Net
|
|
|
|
|
|
Net
|
|
|
|
|
|
Net
|
||||||||||||||||||
|
Before
|
|
Tax
|
|
of
|
|
Before
|
|
Tax
|
|
of
|
|
Before
|
|
Tax
|
|
of
|
||||||||||||||||||
|
Tax
|
|
Effect
|
|
Tax
|
|
Tax
|
|
Effect
|
|
Tax
|
|
Tax
|
|
Effect
|
|
Tax
|
||||||||||||||||||
Defined benefit plan adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net actuarial (loss) gain during the year
|
$
|
(0.3
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.3
|
)
|
|
$
|
0.3
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.2
|
|
Pension settlement reclassification
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.2
|
|
|
(6.6
|
)
|
|
10.6
|
|
|||||||||
Amortization of net actuarial gain included in net income
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
0.4
|
|
|
(0.2
|
)
|
|
0.2
|
|
|||||||||
Net (loss) gain during the year
|
(0.3
|
)
|
|
0.1
|
|
|
(0.2
|
)
|
|
(0.3
|
)
|
|
0.1
|
|
|
(0.2
|
)
|
|
17.9
|
|
|
(6.9
|
)
|
|
11.0
|
|
|||||||||
Foreign currency translation gain (loss)
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
(5.5
|
)
|
|
—
|
|
|
(5.5
|
)
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|||||||||
Other comprehensive income (loss)
|
$
|
2.6
|
|
|
$
|
0.1
|
|
|
$
|
2.7
|
|
|
$
|
(5.8
|
)
|
|
$
|
0.1
|
|
|
$
|
(5.7
|
)
|
|
$
|
19.0
|
|
|
$
|
(6.9
|
)
|
|
$
|
12.1
|
|
|
|
|
Foreign
|
|
|
||||||
|
Defined
|
|
Currency
|
|
|
||||||
|
Benefit Plan
|
|
Translation
|
|
Total
|
||||||
Balance as of December 31, 2016
|
$
|
(10.4
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
(14.2
|
)
|
Other comprehensive income
|
11.0
|
|
|
1.1
|
|
|
12.1
|
|
|||
Balance as of December 31, 2017
|
$
|
0.6
|
|
|
$
|
(2.7
|
)
|
|
$
|
(2.1
|
)
|
Other comprehensive loss
|
(0.2
|
)
|
|
(5.5
|
)
|
|
(5.7
|
)
|
|||
Balance as of December 31, 2018
|
$
|
0.4
|
|
|
$
|
(8.2
|
)
|
|
$
|
(7.8
|
)
|
Other comprehensive income
|
(0.2
|
)
|
|
2.9
|
|
|
2.7
|
|
|||
Balance as of December 31, 2019
|
$
|
0.2
|
|
|
$
|
(5.3
|
)
|
|
$
|
(5.1
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales:
|
|
|
|
|
|
||||||
United States
|
$
|
15,113.7
|
|
|
$
|
14,844.4
|
|
|
$
|
14,245.8
|
|
Canada
|
1,503.1
|
|
|
1,494.0
|
|
|
1,396.6
|
|
|||
Corporate(1)
|
53.7
|
|
|
56.9
|
|
|
45.2
|
|
|||
Total
|
$
|
16,670.5
|
|
|
$
|
16,395.3
|
|
|
$
|
15,687.6
|
|
|
|
|
|
|
|
||||||
Income (loss) before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
99.2
|
|
|
$
|
89.7
|
|
|
$
|
58.4
|
|
Canada
|
11.9
|
|
|
7.9
|
|
|
8.2
|
|
|||
Corporate(2)
|
(33.7
|
)
|
|
(37.7
|
)
|
|
(38.2
|
)
|
|||
Total
|
$
|
77.4
|
|
|
$
|
59.9
|
|
|
$
|
28.4
|
|
|
|
|
|
|
|
||||||
Interest expense, net(3):
|
|
|
|
|
|
||||||
United States
|
$
|
56.6
|
|
|
$
|
54.7
|
|
|
$
|
47.1
|
|
Canada
|
1.5
|
|
|
1.0
|
|
|
1.0
|
|
|||
Corporate(4)
|
(43.7
|
)
|
|
(42.0
|
)
|
|
(37.1
|
)
|
|||
Total
|
$
|
14.4
|
|
|
$
|
13.7
|
|
|
$
|
11.0
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
United States
|
$
|
42.6
|
|
|
$
|
42.1
|
|
|
$
|
37.5
|
|
Canada
|
2.6
|
|
|
2.3
|
|
|
2.4
|
|
|||
Corporate(5)
|
15.7
|
|
|
15.1
|
|
|
14.5
|
|
|||
Total
|
$
|
60.9
|
|
|
$
|
59.5
|
|
|
$
|
54.4
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
United States
|
$
|
20.3
|
|
|
$
|
18.6
|
|
|
$
|
46.7
|
|
Canada
|
2.5
|
|
|
1.5
|
|
|
1.5
|
|
|||
Total
|
$
|
22.8
|
|
|
$
|
20.1
|
|
|
$
|
48.2
|
|
(1)
|
Consists primarily of external sales made by the Company’s consolidating warehouses, management service fee revenue, allowance for sales returns and certain other sales adjustments.
|
(2)
|
Consists primarily of expenses and other income, such as corporate incentives and salaries, LIFO expense, pension termination settlement, health care costs, insurance and workers’ compensation adjustments, elimination of overhead allocations and foreign exchange gains or losses. 2017 includes the recognition of $17.2 million of a pension termination settlement.
|
(3)
|
Includes $0.5 million, $0.3 million, and $0.3 million of interest income for 2019, 2018 and 2017, respectively.
|
(4)
|
Consists primarily of intercompany eliminations for interest.
|
(5)
|
Consists primarily of depreciation for the consolidation centers and amortization of intangible assets.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Identifiable assets:
|
|
|
|
||||
United States
|
$
|
1,741.4
|
|
|
$
|
1,528.6
|
|
Canada
|
157.0
|
|
|
137.5
|
|
||
Total
|
$
|
1,898.4
|
|
|
$
|
1,666.1
|
|
|
Year Ended December 31,
|
||||||||||
Product Category
|
2019
|
|
2018
|
|
2017
|
||||||
Cigarettes
|
$
|
10,892.7
|
|
|
$
|
10,974.5
|
|
|
$
|
10,887.4
|
|
Food
|
1,746.4
|
|
|
1,659.0
|
|
|
1,561.1
|
|
|||
Fresh
|
502.8
|
|
|
474.2
|
|
|
436.3
|
|
|||
Candy
|
1,039.0
|
|
|
992.0
|
|
|
833.4
|
|
|||
Other tobacco products
|
1,438.9
|
|
|
1,387.2
|
|
|
1,272.3
|
|
|||
Health, beauty & general
|
847.2
|
|
|
711.5
|
|
|
513.3
|
|
|||
Beverages
|
202.1
|
|
|
191.0
|
|
|
183.4
|
|
|||
Equipment/other
|
1.4
|
|
|
5.9
|
|
|
0.4
|
|
|||
Total food/non-food products
|
$
|
5,777.8
|
|
|
$
|
5,420.8
|
|
|
$
|
4,800.2
|
|
Total net sales
|
$
|
16,670.5
|
|
|
$
|
16,395.3
|
|
|
$
|
15,687.6
|
|
18.
|
Quarterly Financial Data (Unaudited)
|
|
Three Months Ended
|
||||||||||||||
|
(in millions, except per share data)(1)
|
||||||||||||||
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
|
2019
|
|
2019
|
|
2019
|
|
2019
|
||||||||
Net sales — Cigarettes(2)
|
$
|
2,711.2
|
|
|
$
|
2,880.0
|
|
|
$
|
2,834.0
|
|
|
$
|
2,467.5
|
|
Net sales — Food/Non-food(2)
|
1,443.6
|
|
|
1,542.6
|
|
|
1,505.0
|
|
|
1,286.6
|
|
||||
Net sales(2)
|
4,154.8
|
|
|
4,422.6
|
|
|
4,339
|
|
|
3,754.1
|
|
||||
Cost of goods sold(3)
|
3,924.3
|
|
|
4,176.0
|
|
|
4,100.1
|
|
|
3,545.9
|
|
||||
Gross profit
|
230.5
|
|
|
246.6
|
|
|
238.9
|
|
|
208.2
|
|
||||
Warehousing and distribution expenses(3)
|
140.2
|
|
|
148.6
|
|
|
143.2
|
|
|
134.2
|
|
||||
Selling, general and administrative expenses
|
63.1
|
|
|
61.8
|
|
|
64.6
|
|
|
65.9
|
|
||||
Amortization of intangible assets
|
2.3
|
|
|
2.3
|
|
|
2.7
|
|
|
2.7
|
|
||||
Total operating expenses
|
205.6
|
|
|
212.7
|
|
|
210.5
|
|
|
202.8
|
|
||||
Income from operations
|
24.9
|
|
|
33.9
|
|
|
28.4
|
|
|
5.4
|
|
||||
Interest expense, net
|
(3.6
|
)
|
|
(4.2
|
)
|
|
(3.2
|
)
|
|
(3.4
|
)
|
||||
Foreign currency transaction (losses) gains, net
|
(0.5
|
)
|
|
0.9
|
|
|
(1.0
|
)
|
|
(0.2
|
)
|
||||
Income before income taxes
|
20.8
|
|
|
30.6
|
|
|
24.2
|
|
|
1.8
|
|
||||
Income tax provision
|
(4.6
|
)
|
|
(8.1
|
)
|
|
(6.5
|
)
|
|
(0.5
|
)
|
||||
Net income
|
16.2
|
|
|
22.5
|
|
|
17.7
|
|
|
1.3
|
|
||||
Basic net income per share
|
$
|
0.35
|
|
|
$
|
0.49
|
|
|
$
|
0.39
|
|
|
$
|
0.03
|
|
Diluted net income per share
|
$
|
0.35
|
|
|
$
|
0.49
|
|
|
$
|
0.38
|
|
|
$
|
0.03
|
|
Shares used to compute basic net income per share
|
45.7
|
|
|
45.8
|
|
|
45.9
|
|
|
45.9
|
|
||||
Shares used to compute diluted net income per share
|
46.0
|
|
|
46.1
|
|
|
46.1
|
|
|
46.0
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Excise taxes(2)
|
$
|
819.7
|
|
|
$
|
884.1
|
|
|
$
|
868.8
|
|
|
$
|
768.7
|
|
Cigarette inventory holding gains(4)
|
10.1
|
|
|
0.3
|
|
|
3.8
|
|
|
8.8
|
|
||||
Candy inventory holding gains (5)
|
1.1
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
||||
LIFO expense
|
5.9
|
|
|
7.3
|
|
|
7.4
|
|
|
7.0
|
|
||||
Depreciation and amortization
|
15.1
|
|
|
14.9
|
|
|
15.5
|
|
|
15.4
|
|
||||
Stock-based compensation
|
2.4
|
|
|
3.1
|
|
|
2.2
|
|
|
1.9
|
|
||||
Capital expenditures
|
7.5
|
|
|
6.1
|
|
|
4.1
|
|
|
5.1
|
|
(1)
|
Totals may not agree with full year amounts due to rounding.
|
(2)
|
Excise taxes are included as a component of net sales and cost of goods sold.
|
(3)
|
Warehousing and distribution expenses are not included as a component of the Company’s cost of goods sold. This presentation may differ from that of other registrants.
|
(4)
|
Cigarette inventory holding gains represent income related to cigarette inventories on hand at the time cigarette manufacturers increase their prices. Such increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase.
|
(5)
|
Candy inventory holding gains represent income related to candy inventories on hand at the time candy manufacturers increase their prices. Such increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase. In 2019, the $6.9 million of candy inventory holding gains were attributable to the U.S.
|
|
Three Months Ended
|
||||||||||||||
|
(in millions, except per share data)(1)
|
||||||||||||||
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
|
2018
|
|
2018
|
|
2018
|
|
2018
|
||||||||
Net sales — Cigarettes(2)
|
$
|
2,719.7
|
|
|
$
|
2,874.6
|
|
|
$
|
2,842.7
|
|
|
$
|
2,537.5
|
|
Net sales — Food/Non-food(2)
|
1,370.0
|
|
|
1,398.6
|
|
|
1,383.8
|
|
|
1,268.4
|
|
||||
Net sales(2)
|
4,089.7
|
|
|
4,273.2
|
|
|
4,226.5
|
|
|
3,805.9
|
|
||||
Cost of goods sold(3)
|
3,872.7
|
|
|
4,039.4
|
|
|
4,009.6
|
|
|
3,606.1
|
|
||||
Gross profit
|
217.0
|
|
|
233.8
|
|
|
216.9
|
|
|
199.8
|
|
||||
Warehousing and distribution expenses(3)
|
136.4
|
|
|
137.6
|
|
|
134.3
|
|
|
132.3
|
|
||||
Selling, general and administrative expenses(4)
|
61.2
|
|
|
58.8
|
|
|
61.7
|
|
|
63.4
|
|
||||
Amortization of intangible assets
|
2.4
|
|
|
2.5
|
|
|
2.6
|
|
|
2.5
|
|
||||
Total operating expenses
|
200.0
|
|
|
198.9
|
|
|
198.6
|
|
|
198.2
|
|
||||
Income from operations
|
17.0
|
|
|
34.9
|
|
|
18.3
|
|
|
1.6
|
|
||||
Interest expense, net
|
(3.1
|
)
|
|
(3.4
|
)
|
|
(3.4
|
)
|
|
(3.8
|
)
|
||||
Foreign currency transaction gains (losses), net
|
1.3
|
|
|
(0.4
|
)
|
|
0.5
|
|
|
0.4
|
|
||||
Income (loss) before income taxes
|
15.2
|
|
|
31.1
|
|
|
15.4
|
|
|
(1.8
|
)
|
||||
Income tax (provision) benefit
|
(3.1
|
)
|
|
(7.4
|
)
|
|
(4.4
|
)
|
|
0.5
|
|
||||
Net income (loss)
|
12.1
|
|
|
23.7
|
|
|
11.0
|
|
|
(1.3
|
)
|
||||
Basic net income (loss) per share
|
$
|
0.26
|
|
|
$
|
0.52
|
|
|
$
|
0.24
|
|
|
$
|
(0.03
|
)
|
Diluted net income (loss) per share
|
$
|
0.26
|
|
|
$
|
0.51
|
|
|
$
|
0.24
|
|
|
$
|
(0.03
|
)
|
Shares used to compute basic net income (loss)
per share
|
45.7
|
|
|
45.9
|
|
|
46.0
|
|
|
46.2
|
|
||||
Shares used to compute diluted net income (loss)
per share
|
46.0
|
|
|
46.2
|
|
|
46.1
|
|
|
46.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Excise taxes(2)
|
$
|
859.0
|
|
|
$
|
920.7
|
|
|
$
|
900.4
|
|
|
$
|
811.3
|
|
Cigarette inventory holding gains(5)
|
3.1
|
|
|
5.9
|
|
|
3.5
|
|
|
7.1
|
|
||||
Cigarette tax stamp inventory holding gain(6)
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
||||
LIFO expense
|
5.2
|
|
|
7.2
|
|
|
6.9
|
|
|
5.9
|
|
||||
Depreciation and amortization
|
15.0
|
|
|
14.9
|
|
|
14.7
|
|
|
14.9
|
|
||||
Stock-based compensation
|
1.8
|
|
|
2.0
|
|
|
2.5
|
|
|
1.9
|
|
||||
Capital expenditures
|
5.2
|
|
|
5.7
|
|
|
2.3
|
|
|
6.9
|
|
(1)
|
Totals may not agree with full year amounts due to rounding.
|
(2)
|
Excise taxes are included as a component of net sales and cost of goods sold.
|
(3)
|
Warehousing and distribution expenses are not included as a component of the Company’s cost of goods sold. This presentation may differ from that of other registrants.
|
(4)
|
Selling, general & administrative expenses include business integration costs of $2.7 million consisting of $0.3 million in Q1, $0.1 million in Q2, $0.9 million in Q3, and $1.4 million in Q4.
|
(5)
|
Cigarette inventory holding gains represent income related to cigarette inventories on hand at the time cigarette manufacturers increase their prices. Such increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase.
|
(6)
|
Cigarette inventory tax stamp holding gains represent income related to cigarette tax stamps on hand at the time the price of tax stamp inventory increased.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
|
/s/ Deloitte & Touche LLP
|
|
Dallas, Texas
|
|
March 2, 2020
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
1.
|
Consolidated Financial Statements
|
Report of Independent Registered Public Accounting Firm
|
Financial Statements:
|
Consolidated Balance Sheets
|
Consolidated Statements of Operations
|
Consolidated Statements of Comprehensive Income
|
Consolidated Statements of Stockholders’ Equity
|
Consolidated Statements of Cash Flows
|
Notes to Consolidated Financial Statements
|
2.
|
Financial Statement Schedules
|
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Deductions
|
|
Charged to Other Accounts
|
|
Balance at End of Period
|
||||||||||
Year Ended December 31, 2019(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade receivables
|
$
|
8.3
|
|
|
$
|
7.1
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
14.5
|
|
Inventory reserves
|
1.6
|
|
|
27.8
|
|
|
(27.7
|
)
|
|
—
|
|
|
1.7
|
|
|||||
|
$
|
9.9
|
|
|
$
|
34.9
|
|
|
$
|
(28.4
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
16.2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade receivables
|
$
|
7.3
|
|
|
$
|
3.6
|
|
|
$
|
(2.6
|
)
|
|
$
|
—
|
|
|
$
|
8.3
|
|
Inventory reserves
|
1.0
|
|
|
25.1
|
|
|
(24.5
|
)
|
|
—
|
|
|
1.6
|
|
|||||
|
$
|
8.3
|
|
|
$
|
28.7
|
|
|
$
|
(27.1
|
)
|
|
$
|
—
|
|
|
$
|
9.9
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowances for:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade receivables
|
$
|
7.1
|
|
|
$
|
1.1
|
|
|
$
|
(1.3
|
)
|
|
$
|
0.4
|
|
|
$
|
7.3
|
|
Inventory reserves
|
0.8
|
|
|
20.7
|
|
|
(20.5
|
)
|
|
—
|
|
|
1.0
|
|
|||||
|
$
|
7.9
|
|
|
$
|
21.8
|
|
|
$
|
(21.8
|
)
|
|
$
|
0.4
|
|
|
$
|
8.3
|
|
(1)
|
See Note 11 - Income Taxes for an explanation of the change in tax valuation allowance.
|
3.
|
Exhibits
|
Exhibit
No.
|
Description
|
Third Amended and Revised Joint Plan of Reorganization of Fleming Companies, Inc. and its Subsidiaries Under Chapter 11 of the Bankruptcy Code, dated May 25, 2004 (incorporated by reference to Exhibit 2.1 of the Company’s Registration Statement on Form 10 filed on September 6, 2005).
|
|
|
|
Certificate of Incorporation of Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form 10 filed on September 6, 2005).
|
|
|
|
Certificate of Amendment to Certificate of Incorporation of Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 21, 2015).
|
|
|
|
Certificate of Amendment to Certificate of Incorporation of Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 23, 2018).
|
|
|
|
Second Amended and Restated Bylaws of Core-Mark Holding Company, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on August 18, 2008).
|
|
|
|
2007 Long-Term Incentive Plan (incorporated by reference to Annex A of the Company’s Proxy Statement on Schedule 14A filed on April 23, 2007).
|
|
|
|
Statement of Policy Regarding 2007 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on May 9, 2007).
|
|
|
|
2010 Long-Term Incentive Plan (as amended, effective May 20, 2014) (incorporated by reference to Annex II of the Company’s Proxy Statement on Schedule 14A filed on April 8, 2014).
|
|
|
|
Core-Mark Holding Company, Inc. 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K filed on May 24, 2019).
|
|
|
|
Form of Management Restricted Stock Unit Agreement under the Core-Mark Holding Company, Inc. 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on June 18, 2019).
|
|
|
|
Form of Management Performance Restricted Stock Unit Agreement under the Core-Mark Holding Company, Inc. 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on June 18, 2019).
|
|
|
|
Form of Non-Employee Director Restricted Stock Unit Agreement under the Core-Mark Holding Company, Inc. 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on June 18, 2019).
|
|
|
|
Form of Indemnification Agreement for Officers and Directors (incorporated by reference to Exhibit 10.5 of the Company’s Registration Statement on Form 10 filed on September 6, 2005).
|
|
|
|
Registration Rights Agreement, dated August 20, 2004, among Core-Mark Holding Company, Inc. and the parties listed on Schedule I attached thereto (incorporated by reference to Exhibit 10.10 of the Company’s Registration Statement on Form 10 filed on September 6, 2005).
|
|
|
|
Credit Agreement, dated October 12, 2005, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders, JPMorgan Chase Bank, N.A., as Administrative Agent, General Electric Capital Corporation and Wachovia Capital Finance Corporation (Western), as Co-Syndication Agents and Bank of America, N.A. and Wells Fargo Foothill, LLC, as Co-Documentation Agents (incorporated by reference to Exhibit 10.13 of the Company’s Registration Statement on Form 10 filed on October 21, 2005).
|
|
|
|
Exhibit
No.
|
Description
|
First Amendment to Credit Agreement, dated December 4, 2007, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K filed on March 12, 2009).
|
|
|
|
Second Amendment to Credit Agreement, dated March 12, 2008, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 18, 2008).
|
|
|
|
Third Amendment to Credit Agreement, dated February 2, 2010, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 5, 2010).
|
|
|
|
Fourth Amendment to Credit Agreement, dated May 5, 2011, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on May 9, 2011).
|
|
|
|
Fifth Amendment to Credit Agreement, dated May 30, 2013, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 7, 2013).
|
|
|
|
Sixth Amendment to Credit Agreement, dated May 21, 2015, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Core-Mark Distributors, Inc. and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 22, 2015).
|
|
|
|
Seventh Amendment to Credit Agreement, dated January 11, 2016, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Core-Mark Distributors, Inc. and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on January 12, 2016).
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Eighth Amendment to Credit Agreement, dated May 16, 2016, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Core-Mark Distributors, Inc. and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 17, 2016).
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Ninth Amendment to Credit Agreement, dated November 4, 2016, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Core-Mark Distributors, Inc. and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on November 11, 2016).
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Tenth Amendment to Credit Agreement, dated March 28, 2017, among Core-Mark Holding Company, Inc., Core-Mark International, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Core-Mark Distributors, Inc. and Minter-Weisman Co., as Borrowers, the Lenders Signatory Thereto as Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 8-K filed on March 29, 2017).
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Exhibit
No.
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Description
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Pledge and Security Agreement, dated October 12, 2005, among Core-Mark Holding Company, Inc., Core-Mark Holdings I, Inc., Core-Mark Holdings II, Inc., Core-Mark Holdings III, Inc., Core-Mark International, Inc., Core-Mark Midcontinent, Inc., Core-Mark Interrelated Companies, Inc., Head Distributing Company, Inc. and Minter-Weisman Co., Inc., as Grantors and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.13 of the Company’s Registration Statement on Form 10 filed on October 21, 2005).
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List of Subsidiaries of Core-Mark Holding Company, Inc.
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Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
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Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
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101.INS
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XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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104
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Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101
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CORE-MARK HOLDING COMPANY, INC.
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Date:
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March 2, 2020
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By:
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/s/ SCOTT E. McPHERSON
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Scott E. McPherson
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President, Chief Executive Officer and Director
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SIGNATURE
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TITLE
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DATE
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/s/ SCOTT E. McPHERSON
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President, Chief Executive Officer and Director
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March 2, 2020
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Scott E. McPherson
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(Principal Executive Officer)
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/s/ CHRISTOPHER M. MILLER
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Senior Vice President and Chief Financial Officer
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March 2, 2020
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Christopher M. Miller
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(Principal Financial and Accounting Officer)
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/S/ RANDOLPH I. THORNTON
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Chairman of the Board of Directors
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March 2, 2020
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Randolph I. Thornton
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/S/ STUART W. BOOTH
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Director
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March 2, 2020
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Stuart W. Booth
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/S/ GARY F. COLTER
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Director
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March 2, 2020
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Gary F. Colter
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/s/ ROCKY DEWBRE
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Director
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March 2, 2020
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Rocky Dewbre
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/s/ LAURA FLANAGAN
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Director
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March 2, 2020
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Laura Flanagan
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/S/ ROBERT G. GROSS
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Director
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March 2, 2020
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Robert G. Gross
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/S/ DIANE RANDOLPH
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Director
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March 2, 2020
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Diane Randolph
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/S/ HARVEY L. TEPNER
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Director
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March 2, 2020
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Harvey L. Tepner
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Name of Subsidiary
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Jurisdiction of Organization
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Core-Mark Holding Company, Inc.
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Delaware
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Core-Mark International, Inc.
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Delaware
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Core-Mark Midcontinent, Inc.
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Arkansas
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Core-Mark Interrelated Companies, Inc.
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California
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Core-Mark Distributors, Inc.
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Georgia
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Sources LLC
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Delaware
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/s/ Deloitte & Touche LLP
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Dallas, Texas
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March 2, 2020
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1.
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I have reviewed this annual report on Form 10-K of Core-Mark Holding Company, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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March 2, 2020
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By:
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/s/ SCOTT E. McPHERSON
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Scott E. McPherson
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President, Chief Executive Officer and Director
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1.
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I have reviewed this annual report on Form 10-K of Core-Mark Holding Company, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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March 2, 2020
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By:
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/s/ CHRISTOPHER M. MILLER
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Christopher M. Miller
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Senior Vice President and Chief Financial Officer
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
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Date:
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March 2, 2020
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By:
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/s/ SCOTT E. McPHERSON
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Scott E. McPherson
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President, Chief Executive Officer and Director
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
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Date:
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March 2, 2020
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By:
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/s/ CHRISTOPHER M. MILLER
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Christopher M. Miller
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Senior Vice President and Chief Financial Officer
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