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01/10 19:55
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a generally positive outlook, with strong growth expectations, new customer acquisitions, and strategic investments. Despite some choppiness in independent case volume and ongoing M&A evaluations, the company maintains confidence in growth projections. The Q&A section highlights strong profitability in certain segments and robust M&A pipeline, supporting a positive sentiment. However, management's lack of clarity on some strategic evaluations tempers expectations slightly. Considering the positive guidance and growth initiatives, a stock price increase of 2% to 8% is likely over the next two weeks.
Total Net Sales Grew 10.8% in the first quarter due to strong underlying trends in three operating segments and the addition of Cheney Brothers.
Foodservice Segment Sales Increased 18.8% in the quarter, with organic top line growth increasing 7.7%. Growth driven by independent case growth of 6.3% and chain case growth of 4.4%.
Foodservice Segment Adjusted EBITDA Grew 18.1% in the quarter. Excluding Cheney Brothers, adjusted EBITDA was up by low double digits. Growth attributed to positive mix shift, low single-digit inflation, and procurement efficiencies.
Convenience Segment Sales Grew 3.5% in the quarter, driven by modest volume increase and inflation. Core-Mark outperformed the industry with strong relative volume performance in key categories.
Specialty Segment Net Sales Declined 0.7% due to a challenging quarter for theater and value. However, adjusted EBITDA grew 13% due to improved operating leverage.
Total Company Gross Profit Increased 14.3% in the first quarter, representing a gross profit per case increase of $0.32 compared to the prior year's period.
Adjusted EBITDA Increased 16.6% to $480.1 million in the first quarter, with contributions from all three operating segments.
Net Income Reported at $93.6 million for the first quarter.
Diluted Earnings Per Share $0.60 for the fiscal first quarter, while adjusted diluted earnings per share was $1.18, representing a 1.7% increase year-over-year.
Operating Cash Flow Used $145.2 million in the first quarter to invest in working capital for favorable inventory buys.
Capital Expenditures Invested about $79 million during the quarter, primarily focused on infrastructure growth and high-return projects.
Independent case growth: Exceeded 6%, driven by market share wins and increased customer penetration.
New account wins: Core-Mark began shipping to Love's Travel Stops and will start delivering to RaceTrac locations nationwide.
Market share gains: Broad-based market share gains in the food-away-from-home market.
Convenience segment growth: Core-Mark outperformed the industry with strong volume performance in Foodservice, snacks, and health and beauty care.
Operational efficiencies: Specialty segment drove efficiencies leading to double-digit adjusted EBITDA growth.
Salesforce expansion: Foodservice salesforce headcount increased by 6% year-over-year.
PFG 1 initiative: Encourages collaboration across business segments, driving revenue and profit growth.
M&A strategy: Continued focus on strategic acquisitions to drive growth and shareholder value.
Economic backdrop challenges: The Specialty segment is navigating a slower industry backdrop, partially due to persistently high price points in the candy and snack categories, which has impacted sales growth.
Inflationary pressures: Cost inflation remains a challenge, with inflation rates in the low to mid-single-digit range across segments. Specialty segment inflation was driven by candy price increases, while Convenience segment inflation increased due to higher costs in key categories.
Supply chain and inventory management: The company invested $145.2 million in operating cash flow to manage working capital and take advantage of favorable inventory buys, indicating potential challenges in supply chain and inventory optimization.
Dependence on new account wins: The Convenience segment's growth is partially reliant on onboarding new accounts like Love's Travel Stops and RaceTrac, which could pose risks if these partnerships do not perform as expected.
Slower growth in certain segments: The Specialty segment experienced a decline in net sales by 0.7% due to challenges in the theater and value categories, reflecting slower growth in specific areas.
Volatility in commodity prices: Certain commodities, such as beef, poultry, and cheese, have shown volatility, which could impact cost structures and margins.
Capital expenditure and debt management: The company invested $79 million in capital expenditures and is prioritizing debt reduction, which could limit financial flexibility for other strategic initiatives.
Revenue Expectations: For the second quarter of 2026, net sales are expected to range between $16.4 billion and $16.7 billion. For the full fiscal year, net sales are projected to be between $67.5 billion and $68.5 billion, representing a $500 million increase from the previously announced range.
Adjusted EBITDA Projections: For the second quarter of 2026, adjusted EBITDA is expected to range between $450 million and $470 million. For the full fiscal year, adjusted EBITDA is projected to be between $1.9 billion and $2 billion. The company remains on track to achieve its 3-year adjusted EBITDA target of $2.3 billion to $2.5 billion by fiscal 2028.
Capital Expenditures: Full-year 2026 capital expenditures are anticipated to be approximately 70 basis points of net revenue, focusing on infrastructure growth and high-return projects.
Inflation Expectations: Cost inflation is expected to remain in the low to mid-single-digit range throughout 2026, consistent with the company's modeling.
New Business and Market Trends: The company expects continued contributions from new business wins, including onboarding of Love's Travel Stops and RaceTrac locations, which will fuel top and bottom-line performance. Specialty segment anticipates onboarding several new accounts in the back half of the fiscal year.
Long-Term Financial Targets: The company aims to achieve sales in the range of $73 billion to $75 billion and adjusted EBITDA between $2.3 billion and $2.5 billion by fiscal 2028.
share repurchase: We did not repurchase any shares in the quarter.
The earnings call presents a generally positive outlook, with strong growth expectations, new customer acquisitions, and strategic investments. Despite some choppiness in independent case volume and ongoing M&A evaluations, the company maintains confidence in growth projections. The Q&A section highlights strong profitability in certain segments and robust M&A pipeline, supporting a positive sentiment. However, management's lack of clarity on some strategic evaluations tempers expectations slightly. Considering the positive guidance and growth initiatives, a stock price increase of 2% to 8% is likely over the next two weeks.
The earnings call highlights several positive aspects, including record EBITDA margins, strong growth expectations from acquisitions, and robust independent case growth. While there are some concerns about first-quarter guidance and EBITDA margin moderation in fiscal '26, the overall sentiment is optimistic with strong execution and strategic growth plans. The positive trends in industry traffic and new account growth further support a positive outlook.
The earnings call shows strong financial performance with a 10.5% increase in net sales, 16.2% rise in gross profit, and a 20.1% increase in adjusted EBITDA. Share repurchases and debt reduction indicate financial health. Despite concerns about inflation and competitive pressures, the company maintains a positive outlook with improved guidance. The Q&A reveals cautious optimism, with management acknowledging challenges but also highlighting growth opportunities. Overall, the financial metrics and strategic initiatives suggest a positive stock price movement.
The earnings call indicates strong financial performance with significant year-over-year growth in net sales, gross profit, and adjusted EBITDA, driven by successful acquisitions and operational efficiencies. Despite integration challenges and high leverage, management's optimistic guidance and strategic focus on debt reduction and future share repurchases suggest positive sentiment. The Q&A section reveals confidence in sales growth and cost management, although some areas lacked detailed responses. Overall, the positive financial metrics and strategic initiatives outweigh the concerns, suggesting a positive stock price movement in the short term.
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