UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-51515

Core-Mark Holding Company, Inc.

(Exact name of registrant as specified in its charter)



Delaware				20-1489747
~~Delaware~~			~~20-1489747~~
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1500 Solana Boulevard, Suite 3400				76262
Westlake,	Texas
(Address of principal executive offices)				(Zip Code)

(~~940~~) (940) 293-8600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CORE	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~November 1, 2019, 45,567,274~~May 4, 2020, 45,086,055 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.

FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2019~~MARCH 31, 2020

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

~~Page~~

~~PART I. FINANCIAL INFORMATION~~ITEM 1.

Financial Statements (unaudited)

~~ITEM 1.~~

~~Financial Statements (unaudited)~~

Condensed Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019

Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

Condensed Consolidated Statements of Stockholders’ Equity for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~

Notes to Condensed Consolidated Financial Statements

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1513

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

3229

ITEM 4.

Controls and Procedures

3229

PART II. OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

PART I. FINANCIAL INFORMATION


~~ITEM 1.~~	~~FINANCIAL STATEMENTS~~

ITEM 1.FINANCIAL STATEMENTS

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

(Unaudited)


	September 30,			December 31,				March 31,		December 31,
	2019			2018				2020		2019
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	26.0		$	27.3		Cash and cash equivalents	$	26.0	$	14.1
Accounts receivable, net of allowance for doubtful accounts of $13.0 and $8.3 as of September 30, 2019 and December 31, 2018, respectively	428.7			403.5
Accounts receivable, net of allowance for credit losses of $13.8 and $14.5 as of March 31, 2020 and December 31, 2019, respectively							Accounts receivable, net of allowance for credit losses of $13.8 and $14.5 as of March 31, 2020 and December 31, 2019, respectively	387.3		402.9
Other receivables, net	111.2			89.4			Other receivables, net	100.2		96.2
Inventories, net (Note 3)	870.0			689.0			Inventories, net (Note 3)	758.1		670.9
Deposits and prepayments	95.7			78.8			Deposits and prepayments	79.4		116.0

Total current assets	1,531.6			1,288.0			Total current assets	1,351.0		1,300.1
Property and equipment, net	239.6			229.0			Property and equipment, net	251.7		249.9
Operating lease right-of-use assets (Note 4)	208.5			—
Operating lease right-of-use assets							Operating lease right-of-use assets	194.6		199.8
Goodwill	72.8			72.8			Goodwill	72.8		72.8
Other intangible assets, net	46.7			51.1			Other intangible assets, net	45.4		47.2
Other non-current assets, net	30.1			25.2			Other non-current assets, net	27.7		28.6
Total assets	$	2,129.3		$	1,666.1		Total assets	$	1,943.2	$	1,898.4
Liabilities and Stockholders’ Equity							Liabilities and Stockholders’ Equity
Current liabilities:							Current liabilities:
Accounts payable	$	274.4		$	199.8		Accounts payable	$	268.6	$	192.2
Book overdrafts	41.7			49.4			Book overdrafts	36.3		23.9
Cigarette and tobacco taxes payable	238.0			297.8			Cigarette and tobacco taxes payable	258.3		280.1
Operating lease liabilities (Note 4)	40.3			—
Operating lease liabilities							Operating lease liabilities	35.4		39.5
Accrued liabilities	157.8			134.0			Accrued liabilities	151.6		151.0

Total current liabilities	752.2			681.0			Total current liabilities	750.2		686.7
Long-term debt (Note 5)	535.9			346.2
Long-term debt (Note 4)							Long-term debt (Note 4)	376.7		382.1
Deferred income taxes	27.8			27.1			Deferred income taxes	23.3		22.6
Long-term operating lease liabilities (Note 4)	181.2			—
Long-term operating lease liabilities							Long-term operating lease liabilities	169.0		173.4
Other long-term liabilities	5.8			14.6			Other long-term liabilities	5.2		5.6
Claims liabilities	34.8			30.2			Claims liabilities	36.6		36.1

Total liabilities	1,537.7			1,099.1			Total liabilities	1,361.0		1,306.5
Contingencies (Note 6)
Contingencies (Note 5)							Contingencies (Note 5)
Stockholders’ equity:							Stockholders’ equity:
Common stock, $0.01 par value (150,000,000 shares authorized; 52,700,663 and 52,524,853 shares issued; 45,645,090 and 45,703,705 shares outstanding at September 30, 2019 and December 31, 2018, respectively)	0.5			0.5
Common stock, $0.01 par value (150,000,000 shares authorized; 52,910,228 and 52,702,551 shares issued; 45,086,055 and 45,113,722 shares outstanding at March 31, 2020 and December 31, 2019, respectively)							Common stock, $0.01 par value (150,000,000 shares authorized; 52,910,228 and 52,702,551 shares issued; 45,086,055 and 45,113,722 shares outstanding at March 31, 2020 and December 31, 2019, respectively)	0.5		0.5
Additional paid-in capital	288.3			283.3			Additional paid-in capital	290.2		290.6
Treasury stock at cost (7,055,573 and 6,821,148 shares of common stock at September 30, 2019 and December 31, 2018, respectively)	(98.7		)	(90.6		)
Treasury stock at cost (7,824,173 and 7,588,829 shares of common stock at March 31, 2020 and December 31, 2019, respectively)							Treasury stock at cost (7,824,173 and 7,588,829 shares of common stock at March 31, 2020 and December 31, 2019, respectively)	(118.0)		(112.6)
Retained earnings	407.8			381.6			Retained earnings	417.3		418.5
Accumulated other comprehensive loss	(6.3		)	(7.8		)	Accumulated other comprehensive loss	(7.8)		(5.1)
Total stockholders’ equity	591.6			567.0			Total stockholders’ equity	582.2		591.9
Total liabilities and stockholders’ equity	$	2,129.3		$	1,666.1		Total liabilities and stockholders’ equity	$	1,943.2	$	1,898.4

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30,						September 30,							March 31,
	2019			2018			2019			2018				2020		2019
Net sales	$	4,422.6		$	4,273.2		$	12,515.7		$	12,305.6		Net sales	$	3,939.3	$	3,754.1
Cost of goods sold	4,176.0			4,039.4			11,822.0			11,655.1			Cost of goods sold	3,720.9		3,545.9
Gross profit	246.6			233.8			693.7			650.5			Gross profit	218.4		208.2
Warehousing and distribution expenses	148.6			137.6			426.0			404.2			Warehousing and distribution expenses	142.4		134.2
Selling, general and administrative expenses	61.8			58.8			192.3			183.9			Selling, general and administrative expenses	63.9		65.9
Amortization of intangible assets	2.3			2.5			7.7			7.6			Amortization of intangible assets	2.3		2.7
Total operating expenses	212.7			198.9			626.0			595.7			Total operating expenses	208.6		202.8
Income from operations	33.9			34.9			67.7			54.8			Income from operations	9.8		5.4
Interest expense, net	(4.2		)	(3.4		)	(10.8		)	(10.6		)	Interest expense, net	(3.5)		(3.4)
Foreign currency transaction gains (losses), net	0.9			(0.4		)	(0.3		)	0.5

Foreign currency transaction losses, net													Foreign currency transaction losses, net	(0.2)		(0.2)
Income before income taxes	30.6			31.1			56.6			44.7			Income before income taxes	6.1		1.8
Provision for income taxes	(8.1		)	(7.4		)	(15.1		)	(11.3		)	Provision for income taxes	(1.8)		(0.5)
Net income	$	22.5		$	23.7		$	41.5		$	33.4		Net income	$	4.3	$	1.3

Basic earnings per share (Note 7)	$	0.49		$	0.52		$	0.91		$	0.72
Basic and diluted earnings per share (Note 6)													Basic and diluted earnings per share (Note 6)	$	0.09	$	0.03

Diluted earnings per share (Note 7)	$	0.49		$	0.51		$	0.90		$	0.72

Basic weighted-average shares (Note 7)	45.8			45.9			45.8			46.1

Diluted weighted-average shares (Note 7)	46.1			46.2			46.1			46.2

Basic weighted-average shares (Note 6)													Basic weighted-average shares (Note 6)	45.3		45.9

Diluted weighted-average shares (Note 6)													Diluted weighted-average shares (Note 6)	45.4		46.0

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended					Nine Months Ended						Three Months Ended
	September 30,					September 30,						March 31,
	2019			2018		2019		2018				2020		2019
Net income	$	22.5		$	23.7	$	41.5	$	33.4		Net income	$	4.3	$	1.3


Foreign currency translation (losses) gains, net	(1.5		)	1.2		1.5		(1.9		)	Foreign currency translation (losses) gains, net	(2.7)		1.0
Other comprehensive (loss) income, net of tax	(1.5		)	1.2		1.5		(1.9		)

Comprehensive income	$	21.0		$	24.9	$	43.0	$	31.5		Comprehensive income	$	1.6	$	2.3

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended
	March 31,
	2020		2019
Total stockholders’ equity, beginning balances	$	591.9	$	567.0

Common stock:
Beginning and ending balances	$	0.5	$	0.5



Additional paid-in capital:
Beginning balances	$	290.6	$	283.3
Common stock issued, net of shares withheld for employee taxes	(2.4)		(2.1)
Stock-based compensation expense	2.0		1.9
Ending balances	$	290.2	$	283.1

Treasury stock:
Beginning balances	$	(112.6)	$	(90.6)
Repurchase of common stock	(5.4)		—
Ending balances	$	(118.0)	$	(90.6)

Retained earnings:
Beginning balances	$	418.5	$	381.6
Net income	4.3		1.3
Dividends declared	(5.5)		(5.1)
Ending balances	$	417.3	$	377.8

Accumulated other comprehensive loss:
Beginning balances	$	(5.1)	$	(7.8)
Other comprehensive (loss) gain	(2.7)		1.0
Ending balances	$	(7.8)	$	(6.8)

Total stockholders’ equity, ending balances	$	582.2	$	564.0

Common stock shares:
Beginning share balance	52.7		52.5
Common stock issued, net of shares withheld for employee taxes	0.2		0.2
Ending share balance	52.9		52.7

Treasury stock shares:
Beginning share balance	(7.6)		(6.8)
Repurchase of common stock	(0.2)		—
Ending share balance	(7.8)		(6.8)

Total shares outstanding	45.1		45.9

Dividends declared per share	$	0.12	$	0.11

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Total stockholders’ equity, beginning balances $ 580.8
$ 547.9
$ 567.0
$ 555.2

Common stock:
Beginning and ending balances $ 0.5
$ 0.5
$ 0.5
$ 0.5

Additional paid-in capital:
Beginning balances $ 285.3
$ 279.6
$ 283.3
$ 276.8
Common stock issued, net of shares withheld for employee taxes (0.1 ) (0.2 ) (2.2 ) (1.8 )
Stock-based compensation expense 3.1
2.0
7.2
6.4
Ending balances $ 288.3
$ 281.4
$ 288.3
$ 281.4

Treasury stock:
Beginning balances $ (90.6 ) $ (82.6 ) $ (90.6 ) $ (75.1 )
Repurchase of common stock (8.1 ) (5.0 ) (8.1 ) (12.5 )
Ending balances $ (98.7 ) $ (87.6 ) $ (98.7 ) $ (87.6 )

Retained earnings:
Beginning balances $ 390.4
$ 355.6
$ 381.6
$ 355.1
Net income 22.5
23.7
41.5
33.4
Dividends declared (5.1 ) (4.8 ) (15.3 ) (14.0 )
Ending balances $ 407.8
$ 374.5
$ 407.8
$ 374.5

Accumulated other comprehensive loss:
Beginning balances $ (4.8 ) $ (5.2 ) $ (7.8 ) $ (2.1 )
Other comprehensive (loss) gain (1.5 ) 1.2
1.5
(1.9 )
Ending balances $ (6.3 ) $ (4.0 ) $ (6.3 ) $ (4.0 )

Total stockholders’ equity, ending balances $ 591.6
$ 564.8
$ 591.6
$ 564.8

Common stock shares:
Beginning share balance 52.7
52.5
52.5
52.4
Common stock issued, net of shares withheld for employee taxes —
—
0.2
0.1
Ending share balance 52.7
52.5
52.7
52.5

Treasury stock shares:
Beginning share balance (6.8 ) (6.5 ) (6.8 ) (6.2 )
Repurchase of common stock (0.3 ) (0.2 ) (0.3 ) (0.5 )
Ending share balance (7.1 ) (6.7 ) (7.1 ) (6.7 )

Total shares outstanding 45.6
45.8
45.6
45.8

Dividends declared per share $ 0.11
$ 0.10
$ 0.33
$ 0.30

Table of Contents

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

~~(Unaudited~~(Unaudited))


	Nine Months Ended							Three Months Ended
	September 30,							March 31,
	2019			2018				2020		2019
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	41.5		$	33.4		Net income	$	4.3	$	1.3
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
LIFO and inventory provisions	21.4			20.5			LIFO and inventory provisions	8.0		7.0
Amortization of debt issuance costs	0.6			0.6			Amortization of debt issuance costs	0.2		0.2
Stock-based compensation expense	7.2			6.4			Stock-based compensation expense	2.0		1.9
Bad debt expense, net	5.4			1.8
Credit loss expense, net							Credit loss expense, net	1.8		3.1
Impairment charge and other							Impairment charge and other	0.3		—
Loss on disposals	0.1			0.6			Loss on disposals	—		0.1
Depreciation and amortization	45.8			44.5			Depreciation and amortization	15.7		15.4
Foreign currency losses (gains), net	0.3			(0.5		)
Foreign currency losses, net							Foreign currency losses, net	0.2		0.2
Deferred income taxes	0.5			2.0			Deferred income taxes	0.8		(0.3)

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable, net	(29.9		)	9.9			Accounts receivable, net	12.0		5.4
Other receivables, net	(21.6		)	(2.1		)	Other receivables, net	(5.5)		8.2
Inventories, net	(199.5		)	14.1			Inventories, net	(102.4)		180.7
Deposits, prepayments and other non-current assets	(22.9		)	53.9			Deposits, prepayments and other non-current assets	31.8		(4.1)
Accounts payable	74.2			49.2			Accounts payable	79.5		29.9
Cigarette and tobacco taxes payable	(61.3		)	(71.9		)	Cigarette and tobacco taxes payable	(17.9)		(75.8)
Claims, accrued and other long-term liabilities	27.1			29.7			Claims, accrued and other long-term liabilities	1.7		2.0
Net cash (used in) provided by operating activities	(111.1		)	192.1
Net cash provided by operating activities							Net cash provided by operating activities	32.5		175.2
Cash flows from investing activities:							Cash flows from investing activities:
Acquisition of business	(2.5		)	(2.5		)

Additions to property and equipment, net	(15.3		)	(14.9		)	Additions to property and equipment, net	(5.0)		(5.1)
Capitalization of software and related development costs	(3.3		)	(1.6		)	Capitalization of software and related development costs	(0.8)		(1.4)
Proceeds from sale of property and equipment, net	0.2			0.1			Proceeds from sale of property and equipment, net	—		0.2
Net cash used in investing activities	(20.9		)	(18.9		)	Net cash used in investing activities	(5.8)		(6.3)
Cash flows from financing activities:							Cash flows from financing activities:
Borrowings under revolving credit facility	1,334.6			1,276.1			Borrowings under revolving credit facility	489.7		340.7
Repayments under revolving credit facility	(1,166.6		)	(1,414.3		)	Repayments under revolving credit facility	(501.5)		(499.2)

Payments on finance leases	(3.6		)	(2.0		)	Payments on finance leases	(2.4)		(0.9)
Dividends paid	(15.2		)	(13.9		)	Dividends paid	(5.6)		(5.1)
Repurchases of common stock	(8.1		)	(12.5		)	Repurchases of common stock	(5.4)		—

Tax withholdings related to net share settlements of restricted stock units	(2.2		)	(1.6		)	Tax withholdings related to net share settlements of restricted stock units	(2.4)		(2.1)
Decrease in book overdrafts	(7.7		)	(9.5		)
Net cash provided by (used in) financing activities	131.2			(177.7		)
Increase (Decrease) in book overdrafts							Increase (Decrease) in book overdrafts	12.4		(3.2)
Net cash used in financing activities							Net cash used in financing activities	(15.2)		(169.8)
Effects of changes in foreign exchange rates	(0.5		)	0.7			Effects of changes in foreign exchange rates	0.4		(0.6)
Change in cash and cash equivalents	(1.3		)	(3.8		)	Change in cash and cash equivalents	11.9		(1.5)
Cash and cash equivalents, beginning of period	27.3			41.6			Cash and cash equivalents, beginning of period	14.1		27.3
Cash and cash equivalents, end of period	$	26.0		$	37.8		Cash and cash equivalents, end of period	$	26.0	$	25.8
Supplemental disclosures:							Supplemental disclosures:
Cash (paid) received during the period for:							Cash (paid) received during the period for:
Income taxes, net	$	(13.6	)	$	9.7		Income taxes, net	$	(3.2)	$	(0.2)
Interest	$	(9.1	)	$	(9.2	)	Interest	$	(2.6)	$	(3.1)
Unpaid property and equipment purchases included in accrued liabilities	$	—		$	0.6
Non-cash transactions between other non-current assets and other long-term liabilities	$	4.7		$	—
Operating lease liabilities arising from obtaining new right-of-use assets							Operating lease liabilities arising from obtaining new right-of-use assets	$	6.3	$	7.3

Finance lease liabilities arising from obtaining new right-of-use assets							Finance lease liabilities arising from obtaining new right-of-use assets	$	10.5	$	0.7

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CORE-MARK HOLDING COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	~~Summary of Company Information and Basis of Presentation~~

1.Summary of Company Information and Basis of Presentation

Business

Core-Mark Holding Company, Inc., and its subsidiaries (collectively referred to herein as ~~“the Company”~~the “Company” or “Core-Mark”), are one of the largest marketers of fresh, food and broad-line supply solutions to the convenience retail industry in North America. The Company offers a full range of products, marketing programs and technology solutions to approximately ~~43,000~~42,000 customer locations in the United States (“U.S.”) and Canada. The Company’s customers include traditional convenience stores, drug stores, mass merchants, grocery stores, liquor stores and other specialty and small format stores that carry convenience products. The Company’s product offering includes cigarettes, other tobacco products (“OTP”), alternative nicotine products, candy, snacks, fast food, groceries, fresh products, dairy, bread, beverages, general merchandise and health and beauty care products. The Company operates a network of NaN distribution centers in the U.S. and Canada (excluding 2 distribution facilities it operates as a third-party logistics provider). NaN distribution centers are located in the U.S. and 5 are located in Canada.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated balance sheet as of ~~September 30, 2019,~~March 31, 2020, the unaudited condensed consolidated statements of operations and comprehensive income, the unaudited condensed consolidated statements of stockholders’ equity, ~~for the three and nine months ended September 30, 2019 and 2018,~~ and the unaudited condensed consolidated statements of cash flows, each for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. Accordingly, certain footnotes and other financial information that are normally required by generally accepted accounting principles in the U.S. (“GAAP”) have been condensed or omitted. The condensed consolidated balance sheet as of December 31, ~~2018~~2019 has been derived from the Company’s audited financial statements, which are included in its ~~2018~~2019 Annual Report on Form 10-K, filed with the SEC on March ~~1, 2019.~~2, 2020.

The consolidated financial statements include Core-Mark and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

The unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements in its Annual Report on Form 10-K, for the year ended December 31, ~~2018.~~2019.

The unaudited condensed consolidated interim financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated results of operations, financial position, comprehensive income, changes in stockholders’ equity and cash flows. Results for the interim periods are not necessarily indicative of results to be expected for the full year or any other future periods.

~~Subsequent to the issuance~~

2. Summary of the Company’s interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018, management determined that the amount of foreign currency translation loss disclosed for the nine months ended September 30, 2018 was overstated by $0.9 million in the condensed consolidated statement of comprehensive income, which also impacted retained earnings and accumulated other comprehensive loss by the same amount as of September 30, 2018, as currently presented in the condensed consolidated statement of stockholders’ equity. The impacted financial statement line items have been adjusted in the prior periods presented to correct for this overstatement.Significant Accounting Policies


2.	~~Summary of Significant Accounting Policies~~

Adoption of ~~Other~~ Accounting Pronouncements

On ~~February 25,~~June 16, 2016, the FASB issued ASU No. ~~2016-02,~~2016-13, ~~Leases (Topic 842)~~Financial Instruments - Credit Losses (“Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU ~~2016-02”~~2016-13”), which supersedes the lease accounting requirements in ASC 840. The most significant among the changes in ASU 2016-02 is the recognition of right-of-use (“ROU”) assets and corresponding lease liabilities for leases classified as operating leases. The accounting for finance leases, which were classified as capital leases under historical GAAP, remains substantially unchanged. The lease liabilities are equal to the present value of the remaining lease payments while the ROU asset is determined based on the amount of the lease liability, plus initial direct costs incurred less lease incentives.. The Company ~~elected the optional transition method to apply ASU 2016-02 prospectively at adoption~~adopted this pronouncement on a modified retrospective basis effective January 1, ~~2019, which resulted~~2020. The new guidance replaces the current incurred loss impairment approach with a methodology that incorporates all expected credit loss estimates, resulting in more timely recognition of ~~additional lease assets~~losses. The adoption of ~~approximately $232.1 million, lease liabilities of $244.9 million,~~ASU 2016-13 and ~~a decrease of deferred rent recorded under ASC 840 of $12.8 million. Comparative periods presented in the Consolidated Financial Statements prior to January 1, 2019 continue to be~~

~~presented under ASC 840. The Company has implemented internal controls and new lease software to assist with future reporting. ASU 2016-02 does~~all subsequent amendments did not have ana material impact on the Company’s ~~debt-covenant compliance under its current revolving credit facility.~~

In accordance with an accounting policy election under ASU 2016-02, the Company does not recognize assets or liabilities for leases with an initial term of twelve months or less; these short-term lease payments are recognized in the consolidated statements of operations on a straight-line basis over the lease term. The Company elected the package of practical expedients within ASU 2016-02 that allows an entity to not reassess, prior to the effective date, (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases. The Company also elected the practical expedient to combine lease and non-lease components for all asset classes.

~~Recent Accounting Standards or Updates Not Yet Effective~~financial statements.

On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The Company adopted this pronouncement on a prospective basis effective January 1, 2020. The new guidance simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. ASU 2017-04 requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. Accordingly, the Company has amended its methodology for determining any goodwill impairment calculations. The adoption of ASU 2017-04 did not have a material impact on the Company’s consolidated financial statements.

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Recent Accounting Standards or Updates Not Yet Effective

On August 28, 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans -General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). The new guidance removes disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant for defined benefit pension and other post-retirement benefit plans. ASU 2018-14 requires ~~prospective~~retrospective application and is effective for annual periods beginning after December 15, ~~2019.~~2020, with early adoption permitted. The Company has determined that ASU ~~2017-04~~2018-14 will ~~require~~not have a material impact on its consolidated financial statements.

On December 18, 2019 the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The new guidance enhances and simplifies various aspects of the income tax accounting guidance, including requirements pertaining to hybrid tax regimes, ownership changes in investments, and interim-period accounting for enacted changes in tax law. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The Company ~~to amend~~has determined that ASU 2019-12 will not have a material impact on its ~~methodology for determining any goodwill impairment calculations beginning in 2020.~~consolidated financial statements.

Concentration of Credit Risks

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash investments, accounts receivable and other receivables. The Company places its cash and cash equivalents in short-term instruments with high-quality financial institutions and limits the amount of credit exposure in any one financial instrument.

A credit review is completed for new customers and ongoing credit evaluations of each customer’s financial condition are performed periodically, with ~~reserves maintained~~an allowance recognized for ~~potential~~expected credit losses. Credit limits given to customers are based on a risk assessment of their ability to pay and other factors. Accounts ~~receivables~~receivable are typically not collateralized, but the Company may require prepayments or other guarantees whenever deemed necessary.

Murphy U.S.A., the Company’s largest customer, accounted for approximately 14% and 13% of the Company’s net sales for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and approximately 12% of the Company’s net sales for the three and nine months ended September 30, 2018.~~respectively. No other ~~customers~~customer individually accounted for more than 10% of sales for these periods. GPM Southeast, LLC accounted for approximately 11%, or $43.3 million, of the Company’s accounts receivable as of March 31, 2020. No ~~single~~other customer individually accounted for 10% or more of the Company’s accounts ~~receivables~~receivable as of ~~September 30, 2019~~March 31, 2020 or December 31, ~~2018.~~2019.


3.	~~Inventories, net~~

3. Inventories, Net

Inventories consist of the following (in millions):

September 30,
2019 December 31,
2018
Inventories at FIFO, net of reserves $ 1,068.8
$ 866.1
Less: LIFO reserve (198.8 ) (177.1 )
Total inventories, net of reserves $ 870.0
$ 689.0


	March 31, 2020		December 31, 2019
Inventories at FIFO, net of reserves	$	970.6	$	875.6
Less: LIFO reserve	(212.5)		(204.7)
Total inventories, net of reserves	$	758.1	$	670.9

Cost of goods sold reflects the application of the last-in, first-out (“LIFO”) method of valuing inventories in the U.S. based upon estimated annual producer price indexes. Inventories in Canada are valued on a first-in, first-out (“FIFO”) basis, as LIFO is not a permitted inventory valuation method in Canada. During periods of rising prices, the LIFO method of costing inventories generally results in higher current costs being charged against income while lower costs are retained in inventories. Conversely, during periods of decreasing prices, the LIFO method of costing inventories generally results in lower current costs being charged against income and higher stated inventories. If the FIFO method had been used for valuing inventories in the U.S., inventories would have been approximately ~~$198.8~~$212.5 million and ~~$177.1~~$204.7 million higher as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The Company recorded LIFO expense of ~~$7.3~~$7.8 million and ~~$7.2~~$7.0 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $21.7 million and $20.0 million for the nine months ended September 30, 2019 and 2018,~~ respectively.


4.	~~Leases~~

The Company leases warehouse facilities, trucks, office equipment and certain sales offices. Certain of the Company’s real estate leases include 1 or more options to renew the applicable lease agreement, with the exercise of renewal options at the Company’s sole discretion; the Company generally includes only 1 real estate lease extension option in the recognition of ROU assets and lease liabilities. Certain of the Company’s vehicle leases have residual value guarantees.

Leases with an initial term of twelve months or less are not recorded on the balance sheet; the Company recognizes lease expenses for such leases on a straight-line basis over the lease term. The majority of the Company’s lease payments are fixed and are incorporated into the ROU lease assets and liabilities. However, certain vehicle leases have variable payments, such as per-mile charges, which are expensed as incurred. The Company combines lease components and non-lease components for all asset classes for purposes of recognizing lease assets and liabilities.

~~Leases consist of the following (in millions):~~

Assets Classification September 30,
2019
Operating Operating lease ROU assets $ 208.5
Finance Property and equipment, net 49.1
Total leases $ 257.6

Liabilities
Current:
Operating Operating lease liabilities $ 40.3
Finance Accrued liabilities 6.9
Non-current:
Operating Long-term operating lease liabilities 181.2
Finance Long-term debt 47.9
Total lease liabilities $ 276.3

~~The components of lease costs were as follows (in millions):~~

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2019
Operating lease cost $ 13.0
$ 38.9
Finance lease cost:
Amortization of leased assets 1.6
3.9
Interest on lease liabilities 0.6
1.5
Short-term lease cost 0.4
1.2
Variable lease cost 4.9
16.3
Net lease cost $ 20.5
$ 61.8

~~Maturity of lease liabilities as of September 30, 2019, were as follows (in millions):~~

Operating leases Finance leases Total
2019 $ 12.8
$ 2.4
$ 15.2
2020 48.7
9.2
57.9
2021 41.8
8.6
50.4
2022 33.5
8.5
42.0
2023 26.2
8.2
34.4
2024 and thereafter 103.4
29.5
132.9
Total lease payments 266.4
66.4
332.8
Less: interest (44.9 ) (11.6 ) (56.5 )
Present value of lease liabilities $ 221.5
$ 54.8
$ 276.3

~~Weighted-average remaining lease term and weighted-average discount rate regarding the Company’s leases were as follows:~~



~~Lease term~~	September 30, 2019
~~Weighted-average remaining lease term (years):~~
~~Operating~~	~~7.3~~
~~Finance~~	~~8.0~~
~~Discount rate~~
~~Weighted-average discount rate:~~
~~Operating~~	~~4.8~~	%
~~Finance~~	~~4.8~~	%

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~~Other information regarding the Company’s leases were as follows (in millions):~~4. Long-term Debt

Nine Months Ended
September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases $ 38.5
Operating cash flows used by finance leases $ 1.5
Financing cash flows used by finance leases $ 3.6
Lease liabilities arising from obtaining new ROU assets:
Operating leases $ 7.0
Finance leases $ 29.3

~~As of September 30, 2019, the Company had approximately $22 million of leases, primarily for trailers, that had not yet commenced.~~

~~Future minimum operating lease payments as of December 31, 2018, as reported in the 2018 Form 10-K under ASC 840, were as follows (in millions):~~

~~Operating Leases~~

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

~~Future minimum capital lease payments as of December 31, 2018, as reported in the 2018 Form 10-K under ASC 840, were as follows (in millions):~~

~~Capital Leases~~

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


5.	~~Long-term Debt~~

Long-term debt consists of the following (in millions):

September 30,
2019
December 31,
2018
Amounts borrowed (Credit Facility) $ 488.0
$ 320.0
Obligations under finance leases 47.9
26.2
Total long-term debt $ 535.9
$ 346.2


	March 31, 2020		December 31, 2019
Amounts borrowed (Credit Facility)	$	313.0	$	324.8
Obligations under finance leases	63.7		57.3
Total long-term debt	$	376.7	$	382.1

The Company has a revolving credit facility (the “Credit Facility”) with a capacity of ~~$750.0~~$750 million as of ~~September 30, 2019,~~March 31, 2020, limited by a borrowing base consisting of eligible accounts receivables and inventories. The Credit Facility expires in March 2022 and has an expansion feature which permits an increase of ~~$200.0~~$200 million,, subject to borrowing base requirements. All obligations under the Credit Facility are secured by first-priority liens on substantially all of the Company’s present and future assets. The terms of the Credit Facility permit prepayment without penalty at any time (subject to customary breakage costs with respect to London Interbank Offered Rate (“LIBOR”) or Canadian Dollar Offered Rate (“CDOR”) based loans prepaid prior to the end of an interest period).

Amounts related to the Credit Facility are as follows (in millions, except interest rate data):


	September 30, 2019		December 31, 2018			March 31, 2020		December 31, 2019
Amounts borrowed, net	$	488.0	$	320.0	Amounts borrowed, net	$	313.0	$	324.8
Outstanding letters of credit	16.7		16.7		Outstanding letters of credit	19.7		16.7
Amounts available to borrow⁽¹⁾	231.9		328.9		Amounts available to borrow⁽¹⁾	408.3		341.7
Unamortized debt issuance costs	1.9		2.5		Unamortized debt issuance costs	1.5		1.7


~~(1)~~	~~Subject to borrowing base limitations, and excluding expansion feature of $200.0~~ (1) Subject to borrowing base limitations, and excluding expansion feature of $200 million.


	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30,						September 30,							March 31,
	2019			2018			2019			2018				2020			2019
Average borrowings	$	371.1		$	326.9		$	295.0		$	367.9		Average borrowings	$	336.4		$	277.6
Range of borrowings	252.8 - 489.0			255.7 - 445.0			141.7 - 489.0			232.0 - 575.0			Range of borrowings	151.5 - 499.3			160.0 - 390.0
Unused Credit Facility and letter of credit participation fees⁽¹⁾	0.3			0.3			0.9			0.8			Unused Credit Facility and letter of credit participation fees⁽¹⁾	0.3			0.3
Amortization of debt issuance costs⁽¹⁾	0.2			0.2			0.6			0.6			Amortization of debt issuance costs⁽¹⁾	0.2			0.2
Weighted-average interest rate⁽²⁾	3.5		%	3.3		%	3.6		%	3.0		%	Weighted-average interest rate⁽²⁾	2.7		%	3.7		%


~~(1)~~	~~Included in interest expense, net.~~


~~(2)~~	~~Calculated based on the daily cost of borrowing, reflecting a blend of prime and LIBOR rates.~~

(1) Included in interest expense, net.


6.	~~Contingencies~~

(2) Calculated based on the daily cost of borrowing, reflecting a blend of prime and LIBOR rates.

5.Contingencies

Litigation

The Company is subject to certain legal proceedings, claims, investigations and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is probable that the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. In the opinion of management, the outcome of pending litigation is not expected to have a material effect on the Company’s results of operations, financial condition or liquidity.

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7.	~~Earnings Per Share~~

6.Earnings Per Share

The following table sets forth the computation of basic and diluted net earnings per share (dollars and shares in millions, except per share amounts):


	Three Months Ended				Nine Months Ended					Three Months Ended
	September 30,				September 30,					March 31,
	2019		2018		2019		2018			2020		2019
Earnings									Earnings
Net income	$	22.5	$	23.7	$	41.5	$	33.4	Net income	$	4.3	$	1.3
Shares									Shares
Weighted-average common shares outstanding (basic shares)	45.8		45.9		45.8		46.1		Weighted-average common shares outstanding (basic shares)	45.3		45.9
Adjustment for assumed dilution:									Adjustment for assumed dilution:
Restricted stock units	0.2		0.2		0.2		0.1		Restricted stock units	—		0.1
Performance shares	0.1		0.1		0.1		—		Performance shares	0.1		—
Weighted-average shares assuming dilution (diluted shares)	46.1		46.2		46.1		46.2		Weighted-average shares assuming dilution (diluted shares)	45.4		46.0
Earnings per share									Earnings per share
Basic⁽¹⁾	$	0.49	$	0.52	$	0.91	$	0.72
Diluted⁽¹⁾	$	0.49	$	0.51	$	0.90	$	0.72
Basic and diluted⁽¹⁾									Basic and diluted⁽¹⁾	$	0.09	$	0.03


~~(1)~~	~~Basic and diluted earnings per share are calculated based on unrounded actual amounts.~~

(1) Basic and diluted earnings per share are calculated based on unrounded actual amounts.

The number of common shares that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive were ~~10,279~~469,302 and ~~205,748,~~368,082 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~respectively, and 0 and 243,426, for the same periods in 2018,~~ respectively.


8.	~~Stock-based Compensation Plans~~

7.Stock-based Compensation Plans

2019 Long-Term Incentive Plan

On May 21, 2019, the Company’s stockholders approved the 2019 Long-Term Incentive Plan (“2019 LTIP”) which, among other things, replaces the Company’s 2010 Long-Term Incentive Plan (as amended, the “2010 LTIP”) and reserves for awards an aggregate of up to 4,236,959 ~~shares, consisting~~shares. As of ~~3,523,862~~March 31, 2020, the total number of shares ~~of the Company’s common stock currently~~ available for ~~future~~ issuance under the 2019 LTIP ~~and 713,097 shares that may become available for future issuance under the 2019 LTIP in the event of forfeitures of currently outstanding awards.~~was 3,159,237. The 2019 LTIP allows the Company to grant, among other things, time-vesting and ~~performance-vesting~~performance-based restricted stock unit awards. Awards may be made under the 2019 LTIP through May 21, 2029.

Grant Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the Company granted ~~230,235~~271,107 and ~~350,757,~~218,097, respectively, of time-vesting restricted stock units to certain of its employees and non-employee directors at a weighted-average grant date fair value of ~~$29.67~~$25.32 and ~~$23.66,~~$29.18, respectively.

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company granted ~~154,511~~140,536 performance-based restricted stock units to certain of its employees at a weighted-average grant date fair value of ~~$29.90.~~$25.32. The ~~154,511 performance shares~~140,536 performance-based restricted stock units represent the maximum number that can be earned. The number of ~~performance shares~~performance-based restricted stock units that employees ultimately earn will be based on the Company’s achievement of certain specified performance targets for the full year of ~~2019.~~2020. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company granted ~~175,581~~143,089 performance-based ~~shares~~restricted stock units to certain of its employees at a weighted-average grant date fair value of ~~$23.78,~~$29.18, all of which ~~141,406~~ were ultimately earned, based upon ~~2018~~2019 performance criteria achieved.

Stock-based Compensation Cost

Total stock-based compensation cost included in selling, general and administrative expenses was ~~$3.1~~$2.0 million and ~~$2.0~~$1.9 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized stock-based compensation cost of $7.2 million and $6.4 million,~~ respectively. Total unrecognized stock-based compensation cost related to unvested share-based compensation arrangements was ~~$12.8~~$14.7 million at ~~September 30, 2019,~~March 31, 2020, which is expected to be recognized over a weighted-average period of ~~1.7~~2.0 years. Total unrecognized stock-based compensation cost is adjusted for any unearned ~~performance shares~~or estimated not to be earned performance-based restricted stock units or forfeited shares.

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9.	~~Stockholders’ Equity~~

8.Stockholders’ Equity

Dividends

The Board of Directors approved the following cash dividends in ~~2019~~2020 (in millions, except per share data):

Declaration Date Dividend Per Share Record Date Cash Payment Amount 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
N/A⁽¹⁾
December 13, 2019

Declaration Date

Dividend Per Share

Record Date

Cash Payment Amount

Payment Date

February 24, 2020

$0.12

March 16, 2020

$5.5

March 27, 2020

May 7, 2020

$0.12

May 22, 2020

N/A⁽¹⁾

June 19, 2020


~~(1)~~	~~Amount will be determined based on common stock outstanding as of the record date.~~

(1) Amount will be determined based on common stock outstanding as of the record date.

Repurchase of Common Stock

On ~~August 28, 2017,~~February 24, 2020, the Company’s Board of Directors authorized a ~~$40.0~~$60.0 million stock repurchase program (the “Program”), replacing the Company’s prior stock repurchase program. At the time of approval, the Company had funds totaling $0.4 million remaining under the prior stock repurchase program, which were subsequently retired unused. The timing, price and volume of purchases under the Program are based on market conditions, cash and liquidity requirements, relevant securities laws and other factors. The Program may be discontinued or amended at any time. The Program has no ~~stated~~ expiration date and terminates when the amount authorized has been expended or the Board of Directors withdraws its authorization.

During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, the Company spent ~~$8.1~~$5.4 million to repurchase ~~250,925 shares~~235,344 shares of common stock under the Program. During the three months ended ~~September 30, 2018, the Company spent $5.0 million to repurchase 145,572~~March 31, 2019, 0 shares of common stock were repurchased under the ~~Program. During the nine months ended September 30, 2018, the Company~~

~~spent $12.5 million to~~prior stock repurchase ~~501,680 shares of common stock under the Program.~~program. As of ~~September 30, 2019,~~March 31, 2020, there was ~~$14.3~~$54.6 million available for future share repurchases under the Program. On April 14, 2020, the Company announced that the Program would be suspended due to the volatility related to the novel coronavirus pandemic (“COVID-19”).


~~10.~~	~~Segment and Geographic Information~~

9. Segment and Geographic Information

The Company identifies its operating segments based primarily on the way the Chief Operating Decision Maker (“CODM”) evaluates performance and makes decisions. The Chief Executive Officer of the Company has been identified as the CODM. From the perspective of the CODM, the Company is engaged primarily in the business of distributing packaged consumer products to convenience retail stores in the U.S. and Canada (collectively “North America”), each of which consists of customers that have similar characteristics. Therefore, the Company has determined that it has 2 operating segments, U.S. and Canada, which aggregate to 1 reportable segment. Additionally, the Company presents its segment reporting information based on business operations for each of the 2 geographic areas in which it operates and also by major product category.

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Information about the Company’s business operations based on geographic areas is as follows (in millions):


	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30,						September 30,							March 31,
	2019			2018			2019			2018				2020		2019
Net sales:													Net sales:
United States	$	3,999.3		$	3,852.7		$	11,348.2		$	11,136.0		United States	$	3,579.6	$	3,414.4
Canada	415.7			404.4			1,132.4			1,127.2			Canada	348.4		326.6
Corporate⁽¹⁾	7.6			16.1			35.1			42.4			Corporate⁽¹⁾	11.3		13.1
Total	$	4,422.6		$	4,273.2		$	12,515.7		$	12,305.6		Total	$	3,939.3	$	3,754.1

Income before income taxes:													Income before income taxes:
United States	$	33.5		$	39.5		$	74.1		$	68.3		United States	$	9.2	$	9.3
Canada	3.8			2.1			7.7			5.3			Canada	2.4		1.8
Corporate⁽²⁾	(6.7		)	(10.5		)	(25.2		)	(28.9		)	Corporate⁽²⁾	(5.5)		(9.3)
Total	$	30.6		$	31.1		$	56.6		$	44.7		Total	$	6.1	$	1.8

Interest expense, net:⁽³⁾													Interest expense, net:⁽³⁾
United States	$	15.6		$	14.3		$	41.4		$	41.5		United States	$	14.6	$	13.0
Canada	0.2			0.1			1.0			0.7			Canada	0.5		0.5
Corporate⁽⁴⁾	(11.6		)	(11.0		)	(31.6		)	(31.6		)	Corporate⁽⁴⁾	(11.6)		(10.1)
Total	$	4.2		$	3.4		$	10.8		$	10.6		Total	$	3.5	$	3.4

Depreciation and amortization:													Depreciation and amortization:
United States	$	10.6		$	10.7		$	32.0		$	31.4		United States	$	10.8	$	10.5
Canada	0.7			0.5			1.9			1.7			Canada	0.8		0.6
Corporate⁽⁵⁾	3.6			3.7			11.9			11.4			Corporate⁽⁵⁾	4.1		4.3
Total	$	14.9		$	14.9		$	45.8		$	44.5		Total	$	15.7	$	15.4

Capital expenditures:													Capital expenditures:
United States	$	5.4		$	5.6		$	13.9		$	14.1		United States	$	4.4	$	5.0
Canada	0.7			0.1			1.4			0.8			Canada	0.6		0.1

Total	$	6.1		$	5.7		$	15.3		$	14.9		Total	$	5.0	$	5.1


~~(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, health care costs, insurance and workers’ compensation adjustments, elimination of overhead allocations and foreign exchange gains or losses.


~~(3)~~	~~Includes $0.1 million and $0.3 million of interest income for the three and nine months ended September 30, 2019, respectively.~~

(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.


~~(4)~~	~~Consists primarily of intercompany eliminations for interest.~~


~~(5)~~	~~Consists primarily of depreciation for the consolidation centers and amortization of intangible assets.~~

(2) Consists primarily of expenses and other income, such as corporate incentives and salaries, LIFO expense, health care costs, insurance and workers’ compensation adjustments, elimination of overhead allocations and foreign exchange gains or losses.

(3) Includes $0.1 million of interest income for both of the three months ended March 31, 2020 and 2019.

(4) Consists primarily of intercompany eliminations for interest.

(5) Consists primarily of depreciation for the consolidation centers and amortization of intangible assets.

Identifiable assets by geographic area are as follows (in millions):


	March 31, 2020		December 31, 2019
Identifiable assets:
United States	$	1,788.3	$	1,741.4
Canada	154.9		157.0
Total	$	1,943.2	$	1,898.4

September 30,
2019 December 31,
2018
Identifiable assets:
United States $ 2,003.8
$ 1,528.6
Canada 125.5
137.5
Total $ 2,129.3
$ 1,666.1

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The net sales mix for the Company’s primary product categories is as follows (in millions):


	Three Months Ended
	March 31,
Product Category	2020		2019
Cigarettes	$	2,582.7	$	2,467.5
Food	399.5		381.6
Fresh	120.5		110.7
Candy	256.4		237.3
OTP	360.0		330.0
Health, beauty & general	180.0		187.4
Beverages	39.7		39.4
Equipment/other	0.5		0.2
Total food/non-food products	1,356.6		1,286.6
Total net sales	$	3,939.3	$	3,754.1

Three Months Ended Nine Months Ended
September 30, September 30,
Product Category 2019 2018 2019 2018
Cigarettes $ 2,880.0
$ 2,874.6
$ 8,181.5
$ 8,254.8
Food 476.8
436.4
1,314.6
1,254.8
Fresh 135.8
125.8
376.1
358.1
Candy 269.7
248.1
782.8
749.3
Other tobacco products 370.4
352.8
1,068.9
1,044.2
Health, beauty & general 226.0
177.1
630.3
489.1
Beverages 63.9
57.6
160.2
150.0
Equipment/other —
0.8
1.3
5.3
Total food/non-food products 1,542.6
1,398.6
4,334.2
4,050.8
Total net sales $ 4,422.6
$ 4,273.2
$ 12,515.7
$ 12,305.6

10.Subsequent Events

On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become a pandemic. The effects of the COVID-19 pandemic did not have a significant impact on the Company’s operating results during the three months ended March 31, 2020, however it has impacted the Company’s business in April and given there is still significant uncertainty, the Company expects it will continue to adversely affect its business for some period of time.

As disclosed in the Company’s press release issued on April 14, 2020, the Company withdrew its full-year 2020 financial guidance due to the uncertainty created by COVID-19 and announced certain cost-saving measures that it had implemented across the Company. The Company is closely monitoring the impact of COVID-19 on all aspects of its business and geographies, including how it will impact its customers, employees, suppliers, vendors, business partners and distribution channels.

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~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read together with the unaudited condensed consolidated interim financial statements, including the related notes, and the other financial information appearing elsewhere in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-Q that are not statements of historical fact are forward-looking statements made pursuant to the safe-harbor provisions of the Securities Exchange Act of 1934 and the Securities Act of 1933.

Forward-looking statements in some cases can be identified by the use of words such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “would,” “project,” “predict,” “continue,” “plan,” “propose” or other similar words or expressions. Forward-looking statements are made only as of the date of this Form 10-Q and are based on our current intent, beliefs, plans and expectations. They involve risks and uncertainties that could cause actual future results, performance or developments to differ materially from historical results or those described in or implied by such forward-looking statements.

Factors that might cause or contribute to such differences include, but are not limited to, the extent and duration of the disruption to business activities caused by the global health crisis associated with the novel coronavirus pandemic (“COVID-19”) outbreak, including the effects on vehicle miles driven, on the financial health of our business partners, on supply chains, and on financial and capital markets; declining cigarette sales volumes; our dependence on the convenience retail industry for our revenues; our dependence on qualified labor, senior management and other key personnel; ~~declining cigarette sales volumes;~~ competition in our distribution ~~markets;~~markets, including product, service and pricing pressures related to COVID-19; risks and costs associated with efforts to grow our business through acquisitions; the dependence of some of our distribution centers on a few relatively large customers; manufacturers or retail customers adopting direct distribution channels; fuel and other transportation costs; failure, disruptions or security breaches of our information technology systems; the low-margin nature of cigarette and consumable goods distribution; our reliance on manufacturer discount and incentive programs and cigarette excise stamping allowances; our dependence on relatively few ~~suppliers;~~suppliers and our ability to maintain favorable supplier arrangements; disruptions in suppliers’ operations, including the impact of COVID-19 on our suppliers as well as supply chain, including potential problems with inventory availability and the potential result of higher cost of product and freight due to high demand of products and low supply for an unpredictable period of time; product liability and counterfeit product claims and manufacturer recalls of products; our ability to achieve the expected benefits of implementation of marketing initiatives; failing to maintain our brand and reputation; unexpected outcomes in legal proceedings; attempts by unions to organize our employees; increasing expenses related to employee health benefits; changes to minimum wage laws; failure to comply with governmental regulations or substantial changes to governmental regulations; risks related to changes to our workforce, including reductions to hours, headcount and benefits as a result of COVID-19; earthquake and natural disaster damage; increases in the number or severity of insurance and claims expenses; legislation, regulations and other matters negatively affecting the cigarette, tobacco and alternative nicotine industry; increases in excise taxes or reduction in credit terms by taxing jurisdictions; potential liabilities associated with sales of cigarettes and other tobacco ~~products;~~products (“OTP”); changes to federal, state or provincial income tax legislation; reduction in the payment of dividends; currency exchange rate fluctuations; our ability to borrow additional capital; restrictive covenants in our Credit Facility; and changes to accounting rules or regulations. For a more detailed discussion of such factors, please refer to Part II, Item 1A, “Risk Factors” of any quarterly report on Form 10-Q and to Part I, Item 1A of our Annual Report on Form 10-K, for the year ended December 31, ~~2018~~2019 filed with the SEC on March ~~1, 2019.~~2, 2020. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Our Business

Core-Mark is one of the largest marketers of fresh, food and broad-line supply solutions to the convenience retail industry in North America. We offer a full range of products, marketing programs and technology solutions to approximately ~~43,000~~42,000 customer locations in the U.S. and Canada. Our customers include traditional convenience stores, drug stores, mass merchants, grocery stores, liquor stores and other specialty and small format stores that carry convenience products. Our product offering includes cigarettes, ~~other tobacco products (“OTP”),~~OTP, alternative nicotine products, candy, snacks, ~~fast~~ food, ~~groceries,~~including fresh products, groceries, dairy, bread, beverages, general merchandise and health and beauty care products. As of ~~September 30, 2019,~~March 31, 2020, we operated a network of thirty-two distribution centers in the U.S. and Canada (excluding two distribution facilities we operate as a third-party logistics provider).

~~Third Quarter Overview~~

~~Our net sales in the third quarter~~

Table of 2019 were $4,422.6 million compared to $4,273.2 million for the same period in 2018, an increase of 3.5%, or $149.4 million. The increase in net sales for the third quarter of 2019 was due primarily to a 7.1% increase in sales of food/non-food to existing customers, increases in cigarette prices, net market share gains and the impact of one additional selling day in 2019 compared to the third quarter of 2018, offset by a decline in carton sales. The increase in food/non-food sales to existing customers was driven primarily by strong growth in alternative nicotine products and increases in the fresh, food, beverages and candy categories. Sales growth of alternative nicotine products continue to show strong growth but recent regulatory action could affect growth rates going forward.

Gross profit in the third quarter of 2019 increased 5.5%, or $12.8 million, to $246.6 million from $233.8 million for the same period in 2018, driven primarily by the increase in food/non-food sales to existing customers, including strong growth in alternative nicotine products and net market share gains, partially offset by a decline in cigarette cartons sold. Gross profit in the third quarter of 2018 included incremental inventory holding gains of $7.2 million as compared to 2019.

~~Gross profit margin increased 11 basis points to 5.58% of total net sales during the third quarter of 2019 from 5.47% for the same period in 2018. Remaining gross profit margin~~⁽¹⁾ increased 27 basis points to 5.60% from 5.33%. Gross profit margin benefited from a shift in sales mix toward higher margin food/non-food items and the success of our strategic pricing initiatives, which more than offset the impact of the aforementioned incremental inventory holding gains received in 2018 as compared to 2019.Contents

Operating expenses in the third quarter of 2019 increased 6.9%, or $13.8 million, to $212.7 million from $198.9 million for the same period in 2018. The increase was due primarily to higher warehousing and distribution expenses related to the growth in sales and the impact of the extra selling day. Operating expenses were 4.8% of total net sales for the third quarter of 2019 compared to 4.7% of total net sales for the same period in 2018. Operating expenses were 85.8% of remaining gross profit⁽¹⁾for the third quarter of 2019, compared to 87.4% of remaining gross profit for the same period in 2018. The decrease in operating expenses as a percentage of remaining gross profit was due to operating expense leverage and the increase in gross profit for the quarter.

~~Net income in the third quarter of 2019 decreased $1.2 million, to $22.5 million from net income of $23.7 million for the same period in 2018. Adjusted EBITDA~~⁽¹⁾ increased $0.2 million to $59.2 million for the third quarter of 2019 from $59.0 million for the same period in 2018. Net income and Adjusted EBITDA in the third quarter of 2018 were impacted by $7.2 million of incremental inventory holding gains as compared to the third quarter of 2019.

~~___________________~~

~~(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.”

Business Strategy Overview

Core-Mark’s mission is to be the most valued marketer of fresh, food and broad-line supply solutions to the convenience retail industry. Consistent with this mission, our strategic framework is centered around three key initiatives: growing sales and margins faster than the industry, providing industry-leading category management solutions and leveraging our cost structure. The wholesale convenience retail industry remains highly fragmented, supporting significant opportunities for both organic growth and growth through strategic acquisitions. Core-Mark is one of the largest wholesale distributors to the convenience retail industry in North America, one of two national convenience retail distributors in the U.S. and the largest in Canada, and represents an estimated 7% market share of the in-store sales of convenience stores in North America.

Our growth initiatives include growing same store sales, gaining share of the more than 180,000 North American convenience stores and being opportunistic with acquisition opportunities. Our focus on providing industry-leading category management solutions to our customers positions us to partner with retailers ~~in an effort~~ to help increase their sales and profits. We offer a wide array of innovative, data-based marketing solutions for our customers to leverage in their pursuit of satisfying consumer demand. Whether it be our fresh or food offerings, the benefits of our store specific marketing recommendations or the latest in ordering technologies, we are constantly working to lead the industry in the category management space. The final ~~lever~~major component of our strategic framework is focused on leveraging costs. Core-Mark is actively engaged in efforts to increase the leverage of our operating cost structure through a range of initiatives, including technology investments, ~~process improvement~~centralizing transactional processes and employee ~~engagement.~~engagement aimed at increasing productivity.

We believe consistent execution on the aforementioned strategic priorities will position Core-Mark as the leader in convenience retail distribution and provides a strong pathway to achieve sustainable shareholder returns.

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Impact of COVID-19 on Our Business

On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become a pandemic. We are closely monitoring the impact of COVID-19 on all aspects of our business and geographies, including how it will impact our customers, employees, suppliers, vendors, business partners and distribution channels. The effects of the COVID-19 pandemic did not have a significant impact on our operating results during the three months ended March 31, 2020, however it has impacted our business in April and given there is still significant uncertainty, we expect it will continue to adversely affect our business for some period of time.

While the vast majority of our customers are convenience retailers that continue to operate as essential businesses, the unprecedented impact of COVID-19, including an increase in the level of shelter-in-place orders by states, provinces, cities and counties, has resulted in a significant downturn in miles driven, resulting in a decline in convenience retail store visits across North America. For the month of April 2020, we experienced a year-over-year sales decline of approximately 8%, reflecting a 3% decline in cigarette sales and a 20% decline in food/non-food sales. We also saw a decline in gross profit margin in April of approximately 40 basis points as a result of a shift in sales mix, most notably a larger decline in sales of higher margin food/non-food products relative to cigarettes. In addition, gross profit margin in April was impacted by a shift in sales mix within the food/non-food category, driven primarily by sales growth in OTP, which have lower margins relative to other food/non-food products.

As outlined in our press release on April 14, 2020, we have taken steps to reduce operating costs to better align them with sales volume trends and preserve liquidity. The suspension of our 401(k) matching and material changes to our benefits programs are expected to reduce cost by approximately $8 million in 2020. From a labor perspective, we have reduced headcount by nearly 1,000 employees in response to volume declines due to COVID-19. We are achieving further labor savings by minimizing overtime costs and reducing work hours of non-exempt employees to better align to the reduced volumes. We are also achieving cost savings through actions to reduce other non-essential costs including travel, meetings and events and other discretionary expenditures. And finally, we continue to preserve our liquidity position through our cost reduction efforts, reduced capital expenditures, discipline around inventory management and particular focus on accounts receivables which pose a risk to every business operating in today’s environment. We now expect our capital expenditures for 2020 to be approximately $30 million as compared to our previous guidance of $45 million. We continue to evaluate and take other actions to reduce costs and spending across our organization while continuing to maintain our ability to provide the high level of service our customers expect.

Given our financial strength coming into the pandemic and ample availability of capital, we expect to be able to maintain adequate liquidity through the current environment subject to the duration of COVID-19 and shelter-in-place orders. For further information regarding the impact of COVID-19 on the Company, please refer to Part II, Item 1A, “Risk Factors” in this report, which is incorporated herein by reference.

As we continue to manage our business in this uncertain environment, our priorities will remain the health and safety of our people, providing exemplary service to our customers and prudently managing our business to deliver long-term growth.

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Critical Accounting Policies and Estimates

In preparing our condensed consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our revenue, operating income and net income, as well as on the value of certain assets and liabilities on our condensed consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary.

Due to the COVID-19 pandemic, there has been increased uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of May 7, 2020, the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

For further information about our critical accounting policies and estimates, see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 2, 2020.

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First Quarter Overview

Our net sales in the first quarter of 2020 were $3,939.3 million compared to $3,754.1 million for the same period in 2019, an increase of 4.9%, or $185.2 million. The increase in net sales for the first quarter of 2020 was driven primarily by a 5.4% increase in sales of food/non-food and a 1.6% increase in cigarette carton sales, increases in cigarette prices and the impact of an extra selling day compared to the first quarter of 2019. We experienced a significant increase in sales, primarily in cigarettes, OTP and fresh items, related to COVID-19 in the early part of March, followed by a significant decline in the later part of the month as shelter-in-place orders took effect in many states and provinces.

Gross profit in the first quarter of 2020 increased 4.9%, or $10.2 million, to $218.4 million from $208.2 million for the same period in 2019, driven primarily by the increase in food/non-food sales to existing customers, including strong growth in fresh, candy and OTP categories.

Gross profit margin was 5.54% of total net sales during the first quarter of 2020 compared to 5.55% for the same period in 2019. Remaining gross profit margin⁽¹⁾ increased to 5.51% for the first quarter of 2020 from 5.50% for the same period in 2019. Gross profit margin was affected by lower gross profit margin per carton, and a shift in sales mix toward lower margin items within the food/non-food category.

Operating expenses in the first quarter of 2020 increased 2.9%, or $5.8 million, to $208.6 million from $202.8 million for the same period in 2019. The increase was due primarily to higher warehousing and distribution expenses related to the growth in sales and the impact of the extra selling day. Operating expenses were 5.3% of total net sales for the first quarter of 2020 compared to 5.4% of total net sales for the same period in 2019. Operating expenses were 96.1% of remaining gross profit⁽¹⁾for the first quarter of 2020, compared to 98.3% of remaining gross profit for the same period in 2019. The decrease in operating expenses as a percentage of remaining gross profit was due primarily to lower selling, general and administrative (“SG&A”) expenses resulting from lower salaries and reductions in employee bonus and other expenses.

Net income in the first quarter of 2020 increased $3.0 million, to $4.3 million from net income of $1.3 million for the same period in 2019. Adjusted EBITDA⁽¹⁾ increased $5.6 million to $35.3 million for the first quarter of 2020 from $29.7 million for the same period in 2019. The increases in net income and Adjusted EBITDA were due primarily to the growth in gross profit resulting from an increase in sales to existing customers and cost leverage in SG&A expenses.

(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.”

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Results of Operations

Comparison of the Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and~~ ~~2018~~ (in millions, except percentages)⁽¹⁾:


				Three Months Ended							Three Months Ended										Three Months Ended										Three Months Ended
				September 30, 2019							September 30, 2018										March 31, 2020										March 31, 2019
	Increase (Decrease)			Amounts			% of Net sales		% of Net sales, less excise taxes		Amounts			% of Net sales		% of Net sales, less excise taxes			Increase (Decrease)		Amounts		% of Net sales		% of Net sales, less excise taxes		Amounts		% of Net sales		% of Net sales, less excise taxes
Net sales	$	149.4		$	4,422.6		100.0	%	—	%	$	4,273.2		100.0	%	—	%	Net sales	$	185.2	$	3,939.3	100.0	%	—	%	$	3,754.1	100.0	%	—	%
Net sales — Cigarettes	5.4			2,880.0			65.1		59.4		2,874.6			67.3		61.4		Net sales — Cigarettes	115.2		2,582.7		65.6		60.3		2,467.5		65.7		60.1
Net sales — Food/Non-food	144.0			1,542.6			34.9		40.6		1,398.6			32.7		38.6		Net sales — Food/Non-food	70.0		1,356.6		34.4		39.7		1,286.6		34.3		39.9
Net sales, less excise taxes (non-GAAP)⁽²⁾	186.0			3,538.5			80.0		100.0		3,352.5			78.5		100.0		Net sales, less excise taxes (non-GAAP)⁽²⁾	183.6		3,169.0		80.4		100.0		2,985.4		79.5		100.0
Gross profit⁽³⁾	12.8			246.6			5.6		7.0		233.8			5.5		7.0		Gross profit⁽³⁾	10.2		218.4		5.5		6.9		208.2		5.5		7.0
Warehousing and distribution expenses	11.0			148.6			3.4		4.2		137.6			3.2		4.1		Warehousing and distribution expenses	8.2		142.4		3.6		4.5		134.2		3.6		4.5
Selling, general and administrative expenses	3.0			61.8			1.4		1.7		58.8			1.4		1.8		Selling, general and administrative expenses	(2.0)		63.9		1.6		2.0		65.9		1.8		2.2
Amortization of intangible assets	(0.2		)	2.3			0.1		0.1		2.5			0.1		0.1		Amortization of intangible assets	(0.4)		2.3		0.1		0.1		2.7		0.1		0.1
Income from operations	(1.0		)	33.9			0.8		1.0		34.9			0.8		1.0		Income from operations	4.4		9.8		0.2		0.3		5.4		0.1		0.2
Interest expense, net	0.8			(4.2		)	(0.1	)	(0.1	)	(3.4		)	(0.1	)	(0.1	)	Interest expense, net	0.1		(3.5)		(0.1)		(0.1)		(3.4)		(0.1)		—
Foreign currency transaction gains (losses), net	1.3			0.9			—		—		(0.4		)	—		—

Foreign currency transaction losses, net																		Foreign currency transaction losses, net	—		(0.2)		—		—		(0.2)		—		—
Income before income taxes	(0.5		)	30.6			0.7		0.9		31.1			0.7		0.9		Income before income taxes	4.3		6.1		0.2		0.2		1.8		—		0.1
Net income	(1.2		)	22.5			0.5		0.6		23.7			0.6		0.7		Net income	3.0		4.3		0.1		0.1		1.3		—		—
Adjusted EBITDA (non-GAAP)⁽⁴⁾	0.2			59.2			1.3		1.7		59.0			1.4		1.8		Adjusted EBITDA (non-GAAP)⁽⁴⁾	5.6		35.3		0.9		1.1		29.7		0.8		1.0


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may 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)~~	~~See the reconciliation of Adjusted EBITDA to net income in “Non-GAAP Financial Information.”~~

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

(2) See the reconciliation of net sales to net sales, less excise taxes 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) See the reconciliation of net income to Adjusted EBITDA in “Non-GAAP Financial Information.”

Net Sales. Net sales in the ~~third~~first quarter of ~~2019~~2020 increased by ~~$149.4~~$185.2 million, or ~~3.5%~~4.9%, to ~~$4,422.6~~$3,939.3 million, from ~~$4,273.2~~$3,754.1 million for the same period in ~~2018.~~2019. The increase in net sales was driven primarily by growth in both food/non-food and cigarette sales to existing customers, ~~including strong growth in alternative nicotine products,~~ manufacturers’ price increases of cigarettes and the impact of ~~one extra~~an additional selling ~~day in 2019 compared to the third quarter of 2018 and net market share gains, partially offset by a decrease in cigarette carton sales.~~day.

Net Sales of Cigarettes. Net sales of cigarettes in the ~~third~~first quarter of ~~2019~~2020 increased by ~~$5.4~~$115.2 million, or ~~0.2%~~4.7%, to ~~$2,880.0~~$2,582.7 million from ~~$2,874.6~~$2,467.5 million for the same period in ~~2018.~~2019. The increase was driven primarily by a ~~3.0%~~3.2% increase in the average sales price per carton due primarily to increases in cigarette manufacturers’ prices, ~~partially offset by~~and a ~~2.8% decrease~~1.6% increase in carton sales. Cigarette carton sales ~~decreased~~increased by ~~2.5%~~1.6% and ~~5.6%~~1.0% in the U.S. and Canada, respectively, driven by a ~~decline~~temporary increase in ~~the general consumption of cigarettes, partially offset by net market share gains~~March carton sales related to COVID-19 and the impact of one extra selling day, ~~as compared to the prior quarter.~~partially offset by a decline in carton sales in January and February.

We believe long-term cigarette consumption will continue to be adversely impacted by rising prices, increases in excise taxes and other legislative actions, diminishing social acceptance, sales through illicit markets and increasing use of alternative nicotine products. We expect cigarette manufacturers will raise prices as carton sales decline in order to maintain or enhance their overall profitability, thus partially mitigating the effect of the declines to distributors. Historically, industry data indicates that convenience retailers have more than offset cigarette ~~volume~~ profit declines through ~~higher~~ sales ~~of other nicotine products, fresh and food service, and other~~growth in food/non-food products. As discussed in the disclosures regarding the uncertainty of the impact of COVID-19, the rate of decline of carton sales has increased in the month of April 2020 and we expect to continue to see a temporary elevation of that trend until convenience retail store visits return to historical levels.

Net cigarette sales as a percentage of total net sales was ~~65.1%~~65.6% in the ~~third~~first quarter of ~~2019~~2020 compared to ~~67.3%~~65.7% for the same period last year.

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Net Sales of Food/Non-food Products. Net sales of food/non-food products in the ~~third~~first quarter of ~~2019~~2020 increased ~~$144.0~~$70.0 million, or ~~10.3%~~5.4%, to ~~$1,542.6~~$1,356.6 million from ~~$1,398.6~~$1,286.6 million for the same period in ~~2018.~~2019.

The following table provides net sales by product category for our food/non-food products (in millions, except percentages)⁽¹⁾:


	Three Months Ended										Three Months Ended
	September 30,				Increase (Decrease)						March 31,						Increase (Decrease)
Product Category	2019		2018		Amounts			Percentage		Product Category	2020		2019		Amounts		Percentage
Food	$	476.8	$	436.4	$	40.4		9.3	%	Food	$	399.5	$	381.6	$	17.9	4.7	%
Fresh	135.8		125.8		10.0			7.9	%	Fresh	120.5		110.7		9.8		8.9	%
Candy	269.7		248.1		21.6			8.7	%	Candy	256.4		237.3		19.1		8.0	%
OTP	370.4		352.8		17.6			5.0	%	OTP	360.0		330.0		30.0		9.1	%
Health, beauty & general	226.0		177.1		48.9			27.6	%	Health, beauty & general	180.0		187.4		(7.4)		(3.9)	%
Beverages	63.9		57.6		6.3			10.9	%	Beverages	39.7		39.4		0.3		0.8	%
Equipment/other	—		0.8		(0.8		)	(100.0	)%	Equipment/other	0.5		0.2		0.3		150.0	%
Total food/non-food Products	$	1,542.6	$	1,398.6	$	144.0		10.3	%
Total food/non-food products										Total food/non-food products	$	1,356.6	$	1,286.6	$	70.0	5.4	%


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

The increase in food/non-food sales for the ~~third~~first quarter of ~~2019~~2020 was driven primarily by an increase ~~of 7.1%~~ in sales to existing customers, ~~net market share gains~~including strong growth in fresh foods, OTP and candy and the ~~impact~~benefit of one extra selling day this year. Certain product categories including OTP, fresh and food items and candy benefited from stronger sales growth in ~~2019 compared to same quarter~~early March, associated with the onset of the COVID-19 crisis in ~~2018.~~North America, which was offset by sales declines in late March as shelter-in-place orders took effect in many states and provinces. Our health, beauty & general category ~~sales benefited from increased~~was impacted by a decline in sales of alternative nicotine ~~products. We believe, in the near-term, the overall trend toward the increased use of alternative nicotine and smokeless tobacco~~ products will continue, and will partially offset the impact of the expected long-term decline of cigarette consumption. However, the regulatory environment surrounding alternative nicotine products is uncertain anddue to the enactment of regulations ~~and other laws at~~governing the sale of flavored product categories. Alternative nicotine sales were also impacted by approximately $19 million in sales returns associated with flavored alternative nicotine products following the federal ~~state and local level could have a material impact on the availability~~regulations enacted in early February, all of ~~such products. Sales growth in~~which were guaranteed by our ~~OTP category was impacted by a manufacturer shortage of cigars; excluding cigars, OTP sales increased 7.5% for the third quarter of 2019.~~vendors.

Net sales of food/non-food products as a percentage of total net sales was ~~34.9%~~34.4% for the ~~third~~first quarter of ~~2019~~2020 compared to ~~32.7%~~34.3% for the same period in ~~2018.~~2019.

Gross Profit. Gross profit represents profit after deducting cost of goods sold from net sales during the period. Inventory holding gains represent incremental revenues, whereas vendor incentives, OTP tax refunds and changes in last-in, first-out (“LIFO”) reserves are components of cost of goods sold. Gross profit in the ~~third~~first quarter of ~~2019~~2020 increased ~~$12.8~~$10.2 million, or ~~5.5%~~4.9%, to ~~$246.6~~$218.4 million from ~~$233.8~~$208.2 million for the same period in ~~2018,~~2019, driven primarily by an increase in food/non-food sales to existing customers. Gross profit in the third quarter of 2018 included a $7.4 million cigarette tax stamp holding gain and a $5.9 million cigarette inventory holding gain. Gross profit in the third quarter of 2019 included a $5.8 million candy inventory holding gain and a $0.3 million cigarette inventory holding gain. The lower cigarette inventory holding gain in the third quarter of 2019 was due to a change in the timing of manufacturer price increases.

Gross profit margin ~~increased 11 basis points to 5.58%~~was 5.54% of total net sales during the ~~third~~first quarter of ~~2019 from 5.47%~~2020 compared to 5.55% for the same period in ~~2018.~~2019. The ~~increase~~decrease in gross profit margin was driven primarily by ~~the overall shift~~a decline in ~~sales mix toward higher~~cigarette gross profit margin ~~food/non-food items, driven in part by strong growth of alternative nicotine product sales and higher margins in the food category, partially offset by~~due primarily to cigarette price inflation.

Increases in cigarette prices and excise taxes typically have a negative impact on our gross profit margins with respect to sales because gross profit on cigarette sales is generally fixed on a cents-per-carton basis. Therefore, as cigarette prices and taxes increase, gross profit generally decreases as a percentage of sales. Conversely, we generally benefit from food/non-food price increases because product costs for these categories are usually marked up using a percentage of cost of goods sold.

Distributors such as Core-Mark, may from time to time, earn higher gross profits on inventory and excise tax stamp quantities on hand at the time manufacturers increase their prices or when states, localities or provinces increase their excise taxes. Such increases are reflected in customer pricing for all subsequent sales, including sales of inventory on hand at the time of the increase. The resulting higher gross profits are referred to as inventory holding gains.

~~Our cigarette, candy and excise tax inventory holding gains were $6.1 million in the third quarter of 2019 compared to $13.3 million for the same period in 2018.~~ We expect cigarette manufacturers will continue to raise prices as carton sales decline in

order to maintain or enhance their overall profitability and the various taxing jurisdictions will raise excise taxes to make up for lost tax dollars related to consumption declines.

LIFO expense was ~~$7.3~~$7.8 million for the ~~third~~first quarter of ~~2019~~2020 compared to ~~$7.2~~$7.0 million for the same period of ~~2018.~~2019. Since we value our inventory in the U.S. on a LIFO basis, our gross profit can be positively or negatively impacted depending on the relative level of price inflation or deflation in manufacturer prices as reported in the Bureau of Labor Statistics Purchase Price Index (“PPI”) used to estimate and record our book LIFO expense.

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The following table provides the components of gross profit (in millions, except percentages)⁽¹⁾:


				Three Months Ended							Three Months Ended											Three Months Ended															Three Months Ended
				September 30, 2019							September 30, 2018											March 31, 2020															March 31, 2019
	Increase (Decrease)			Amounts			% of Net sales		% of Net sales, less excise taxes		Amounts			% of Net sales		% of Net sales, less excise taxes			Increase (Decrease)			Amounts			% of Net sales			% of Net sales, less excise taxes			Amounts			% of Net sales			% of Net sales, less excise taxes
Net sales	$	149.4		$	4,422.6		100.0	%	—	%	$	4,273.2		100.0	%	—	%	Net sales	$	185.2		$	3,939.3		100.0	%		—	%		$	3,754.1		100.0	%		—	%
Net sales, less excise taxes (non-GAAP)⁽²⁾	186.0			3,538.5			80.0		100.0		3,352.5			78.5		100.0		Net sales, less excise taxes (non-GAAP)⁽²⁾	183.6			3,169.0			80.4			100.0			2,985.4			79.5			100.0
Components of gross profit:																		Components of gross profit:
Cigarette inventory holding gains⁽³⁾	$	(5.6	)	$	0.3		0.01	%	0.01	%	$	5.9		0.14	%	0.18	%	Cigarette inventory holding gains⁽³⁾	$	0.3		$	9.1		0.23	%		0.29	%		$	8.8		0.24	%		0.29	%
Candy inventory holding gains⁽⁴⁾	5.8			5.8			0.14		0.17		—			—		—
Cigarette tax stamp inventory holding gain⁽⁵⁾	(7.4		)	—			—		—		7.4			0.17		0.22

LIFO expense	(0.1		)	(7.3		)	(0.17	)	(0.21	)	(7.2		)	(0.17	)	(0.21	)	LIFO expense	(0.8)			(7.8)			(0.20)			(0.25)			(7.0)			(0.19)			(0.23)
Remaining gross profit (non-GAAP)⁽⁶⁾⁽⁴⁾	20.1			247.8			5.60		7.00		227.7			5.33		6.79		10.7			217.1			5.51			6.85			206.4			5.50			6.91
Gross profit	$	12.8		$	246.6		5.58	%	6.97	%	$	233.8		5.47	%	6.98	%	Gross profit	$	10.2		$	218.4		5.54	%		6.89	%		$	208.2		5.55	%		6.97	%


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	~~See reconciliation of net sales, less excise taxes to net sales in “Non-GAAP Financial Information.”~~


~~(3)~~	For 2019, $0.2 million and $0.1 million of cigarette inventory holding gains were attributable to the U.S and Canada, respectively. For 2018, the $5.9 million of cigarette inventory holding gains were all attributable to the U.S.


~~(4)~~	~~For the three months ended September 30, 2019, the candy inventory holding gain was attributable to the U.S.~~


~~(5)~~	~~For the three months ended September 30, 2018, the cigarette tax stamp inventory holding gain was attributable to the U.S.~~


~~(6)~~	Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette inventory holding gains and other items that significantly affect the comparability of gross profit.

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

(2) See reconciliation of net sales to net sales, less excise taxes in “Non-GAAP Financial Information.”

(3) For 2020, $7.8 million and $1.3 million of cigarette inventory holding gains were attributable to the U.S and Canada, respectively. For 2019, $7.4 million and $1.4 million of cigarette inventory holding gains were attributable to the U.S. and Canada, respectively.

(4) Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette inventory holding gains and other items that significantly affect the comparability of gross profit.

Remaining gross profit, a non-GAAP financial measure (see reconciliation of ~~remaining~~ gross profit to remaining gross profit in “Non-GAAP Financial Information”), increased ~~$20.1~~$10.7 million, or ~~8.8%~~5.2%, to ~~$247.8~~$217.1 million for the ~~third~~first quarter of ~~2019~~2020 from ~~$227.7~~$206.4 million for the same period in ~~2018.~~2019. Remaining gross profit margin, a non-GAAP financial measure (see reconciliation of remaining gross profit margin, as well as an explanation of its significance, in “Non-GAAP Financial Information”) ~~was 5.60% in~~increased to 5.51% for the ~~third~~first quarter of ~~2019 compared to 5.33%~~2020 from 5.50% for the same period in ~~2018.~~2019. Higher margins in the food and fresh categories this year were somewhat offset by the impact of a shift in sales mix to OTP, which has significantly lower margins than our other food/non-food categories.

Cigarette remaining gross profit, a non-GAAP financial measure (see reconciliation of cigarette ~~remaining~~ gross profit to cigarette remaining gross profit in “Non-GAAP Financial Information”), ~~decreased $0.3~~increased $1.6 million, or ~~0.5%~~3.3%, to ~~$57.6~~$49.7 million for the ~~third~~first quarter of ~~2019~~2020 from ~~$57.9~~$48.1 million for the same period in ~~2018. A reduction~~2019. The increase in cigarette remaining gross profit ~~resulting from~~is driven primarily by a ~~2.8% decline~~1.6% increase in cigarette carton sales ~~was offset by~~and a ~~2.3%~~1.6% increase in remaining gross profit per carton.

Food/non-food remaining gross profit, a non-GAAP financial measure (see reconciliation of food/non-food ~~remaining~~ gross profit to food/non-food remaining gross profit in “Non-GAAP Financial Information”), increased ~~$20.4~~$9.1 million, or ~~12.0%~~5.7%, to ~~$190.2~~$167.4 million for the ~~third~~first quarter of ~~2019~~2020 from ~~$169.8~~$158.3 million the same period in ~~2018.~~2019. Food/non-food remaining gross profit margin, a non-GAAP financial measure (see reconciliation of food/non-food remaining gross profit margin in “Non-GAAP Financial Information”) in the ~~third~~first quarter of ~~2019~~2020 increased to ~~12.33%~~12.34% from ~~12.14%~~12.30% for the same period in ~~2018,~~2019, driven primarily by an increase in sales ~~of higher-margin alternative nicotine products, higher margins~~ in our food ~~category~~and beverage categories and our strategic pricing initiatives.

For the ~~third~~first quarter of ~~2019,~~2020, our remaining gross profit for food/non-food products was ~~76.8%~~77.1% of our total remaining gross profit compared to ~~74.6%~~76.7% for the same period in ~~2018.~~2019.

Operating Expenses. Our operating expenses include costs related to warehousing and distribution, selling, general and administrative expenses and amortization of intangible assets. In the ~~third~~first quarter of ~~2019,~~2020, operating expenses increased by ~~$13.8~~$5.8 million, or ~~6.9%~~2.9%, to ~~$212.7~~$208.6 million from ~~$198.9~~$202.8 million for the same period in ~~2018.~~2019. The increase in operating expenses was due primarily to higher warehousing and distribution ~~expenses, which includes the impact of the extra selling day during the third quarter of 2019.~~expenses. As a percentage of total net sales, operating expenses were ~~4.8%~~5.3% for the ~~third~~first quarter of ~~2019~~2020 compared to ~~4.7%~~5.4% for the same period in ~~2018.~~2019. Operating expenses were ~~85.8%~~96.1% of remaining gross profit, a non-GAAP financial ratio, (see reconciliation of operating expenses as a percentage of remaining gross profit, as well as an explanation of its significance, in “Non-GAAP Financial Information”) for the ~~third~~first quarter of ~~2019,~~2020, compared to ~~87.4%~~98.3% of remaining gross profit for the same period in ~~2018.~~2019. Operating expenses as a percentage of remaining gross profit was favorably impacted primarily by ~~the sales mix shift to higher-margin food/non-food products.~~lower SG&A expenses resulting from lower salaries and reductions in employee bonus and other expenses.

Warehousing and Distribution Expenses. Warehousing and distribution expenses increased ~~$11.0~~$8.2 million, or ~~8.0%~~6.1%, to ~~$148.6~~$142.4 million in the ~~third~~first quarter of ~~2019~~2020 from ~~$137.6~~$134.2 million for the same period in ~~2018.~~2019. Warehousing and distribution

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expenses were 3.6% of total net sales for both the first quarter of 2020 and 2019. Warehousing and distribution expenses were ~~3.4% of total net sales for the third quarter of 2019 compared to 3.2% of total net sales for the same period in 2018. Warehouse and distribution expenses were 60.0%~~65.6% of remaining gross profit, a non-GAAP financial ratio, (see reconciliation, as well as an explanation of its significance, in “Non-GAAP Financial Information”) for the ~~third~~first quarter of ~~2019,~~2020, compared to ~~60.4%~~65.0% of remaining gross profit for the same period in ~~2018.~~2019. The increase in warehousing and distribution expenses was due primarily to increased volume, higher salaries and related benefits, ~~which includes~~ the impact of ~~the extra~~one additional selling day and reduced labor efficiencies associated with significant volume fluctuations in March due to the ~~third quarter~~impact of ~~2019.~~COVID-19.

~~Selling, General and Administrative (“~~SG~~&A”)~~&A Expenses. SG&A expenses ~~increased $3.0~~decreased $2.0 million, or ~~5.1%~~3.0%, to ~~$61.8~~$63.9 million in the ~~third~~first quarter of ~~2019~~2020 from ~~$58.8~~$65.9 million for the same period in ~~2018.~~2019. SG&A expenses were ~~1.4%~~1.6% of total net sales for the ~~third~~first quarter of ~~2019 and 2018.~~2020 as compared to 1.8% of total net sales for the same period in 2019. SG&A ~~was 24.9%~~expenses were 29.4% of remaining gross profit, a non-GAAP financial ratio (see reconciliation, as well as an explanation of its significance, in “Non-GAAP Financial Information”), for the ~~third~~first quarter of ~~2019~~2020 compared to ~~25.8%~~31.9% of remaining gross profit for the same period in ~~2018.~~2019. The reduction in SG&A expenses was due primarily to a decrease in general salaries, a reduction in employee bonus expense, lower credit losses and a reduction in costs associated with the corporate relocation in 2019.

Amortization Expense. Amortization expense decreased ~~$0.2~~$0.4 million, or ~~8.0%~~14.8%, in the ~~third~~first quarter of ~~2019~~2020 to $2.3 million from ~~$2.5~~$2.7 million for the same period in ~~2018.~~2019.

Interest Expense, Net. Interest expense, net, includes interest income and expense, amortization of loan origination costs related to borrowings, facility fees and interest on finance lease obligations. Interest expense, net increased ~~$0.8 million, or 23.5%,~~ to ~~$4.2~~$3.5 million in the ~~third~~first quarter of ~~2019~~2020 from $3.4 million for the same period in ~~2018.~~2019. The increase in net interest expense was due primarily to higher average borrowings during the ~~third~~first quarter of ~~2019, in addition to an increase~~2020, partially offset by a decrease in the average borrowing rate. Average borrowings in the ~~third~~first quarter of ~~2019~~2020 were ~~$371.1~~$336.4 million with a weighted-average interest rate of ~~3.5%~~2.7% compared to average borrowings of ~~$326.9~~$277.6 million with a weighted-average interest rate of ~~3.3%~~3.7% for the same period in ~~2018.~~2019.

Foreign Currency Transaction ~~Gains (Losses),~~Losses, Net. We recognized a foreign currency ~~gain~~loss of ~~$0.9~~$0.2 million in the ~~third~~first quarter of ~~2019 compared to a loss of $0.4 million for the same period in 2018. The change was due primarily to fluctuations in our net intercompany borrowing position~~both 2020 and ~~the Canadian/U.S. exchange rate.~~2019. During times of a strengthening U.S. dollar, we generally record foreign currency losses from our Canadian operations. Conversely, during times of a weakening U.S. dollar, we generally record foreign currency gains.

Income Taxes. For the ~~third~~first quarter of ~~2019, we recognized an income~~2020, our effective tax rate was a provision of ~~$8.1 million~~29.5% compared to ~~$7.4 million~~a provision of 27.8% for the same period in ~~2018. We currently expect our effective tax rate to be approximately 27% for~~ 2019. ~~The effective tax rate for the three months ended September 30, 2019 was 26.5% compared to 23.8% for the same period in 2018.~~

Adjusted EBITDA. Adjusted EBITDA, a non-GAAP financial measure (see the reconciliation of net income to Adjusted EBITDA ~~to net income~~ in “Non-GAAP Financial Information”), increased ~~$0.2~~$5.6 million, or ~~0.3%~~18.9%, to ~~$59.2~~$35.3 million for the ~~third~~first quarter of ~~2019~~2020 from ~~$59.0 million for the same period last year. The third quarter of 2019 includes the impact of $6.1 million of inventory holding gains compared to $13.3 million in the third quarter of 2018.~~

~~Results of Operations~~

~~Comparison of the Nine Months Ended September 30, 2019 and~~ ~~2018~~ ~~(in millions, except percentages)~~⁽¹⁾:

Nine Months Ended Nine Months Ended
September 30, 2019 September 30, 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 $ 210.1
$ 12,515.7
100.0 % — % $ 12,305.6
100.0 % — %
Net sales — Cigarettes (73.3 ) 8,181.5
65.4
59.7
8,254.8
67.1
61.3
Net sales — Food/Non-food 283.4
4,334.2
34.6
40.3
4,050.8
32.9
38.7
Net sales, less excise taxes
(non-GAAP)⁽²⁾
320.9
9,994.1
79.9
100.0
9,673.2
78.6
100.0
Gross profit⁽³⁾
43.2
693.7
5.5
6.9
650.5
5.3
6.7
Warehousing and distribution expenses 21.8
426.0
3.4
4.3
404.2
3.3
4.2
Selling, general and administrative expenses 8.4
192.3
1.5
1.9
183.9
1.5
1.9
Amortization of intangible assets 0.1
7.7
0.1
0.1
7.6
0.1
0.1
Income from operations 12.9
67.7
0.5
0.7
54.8
0.4
0.6
Interest expense, net 0.2
(10.8 ) (0.1 ) (0.1 ) (10.6 ) (0.1 ) (0.1 )
Foreign currency transaction (losses) gains, net (0.8 ) (0.3 ) —
—
0.5
—
—
Income before income taxes 11.9
56.6
0.5
0.6
44.7
0.4
0.5
Net income 8.1
41.5
0.3
0.4
33.4
0.3
0.3
Adjusted EBITDA (non-GAAP)⁽⁴⁾
16.7
142.4
1.1
1.4
125.7
1.0
1.3


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may 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)~~	~~See the reconciliation of Adjusted EBITDA to net income in “Non-GAAP Financial Information.”~~

~~Net Sales.~~ Net sales for the nine months ended September 30, 2019 increased by $210.1 million, or 1.7%, to $12,515.7 million, from $12,305.6 million for the same period in 2018. The increase in net sales was driven primarily by growth in sales of food/non-food to existing customers, cigarette manufacturer price increases and net market share gains. The increases in net sales were partially offset by a decrease in cigarette carton sales to existing customers, the expiration of the Kum & Go (“K&G”) distribution agreement in April 2018 and the transition of certain Rite-Aid stores, which were acquired by Walgreens.

~~Net Sales of Cigarettes.~~ Net sales of cigarettes for the nine months ended September 30, 2019 decreased by $73.3 million, or 0.9%, to $8,181.5 million from $8,254.8 million for the same period in 2018. The decrease in cigarette net sales was driven primarily by a 4.1% decline in carton sales, partially offset by a 3.1% increase in the average sales price per carton due primarily to increases in cigarette manufacturers’ prices. Cigarette carton sales decreased by 3.9% in the U.S. driven primarily by a decline in the general consumption of cigarettes and the transition of certain Rite-Aid stores compared to the first half of 2018, partially offset by market share gains. Cigarette carton sales decreased by 6.4% in Canada due primarily to a decline in the general consumption of cigarettes.

~~Net cigarette sales as a percentage of total net sales was 65.4% for the nine months ended September 30, 2019 compared to 67.1% for the same period last year.~~

~~Net Sales of Food/Non-food Products.~~ ~~Net sales of food/non-food products for the nine months ended September 30, 2019 increased $283.4 million, or 7.0%, to $4,334.2 million from $4,050.8 million for the same period in 2018.~~

~~The following table provides net sales by product category for our food/non-food products (in millions, except percentages)~~⁽¹⁾:

Nine Months Ended
September 30, Increase (Decrease)
Product Category 2019 2018 Amounts Percentage
Food $ 1,314.6
$ 1,254.8
$ 59.8
4.8 %
Fresh 376.1
358.1
18.0
5.0 %
Candy 782.8
749.3
33.5
4.5 %
OTP 1,068.9
1,044.2
24.7
2.4 %
Health, beauty & general 630.3
489.1
141.2
28.9 %
Beverages 160.2
150.0
10.2
6.8 %
Equipment/other 1.3
5.3
(4.0 ) (75.5 )%
Total food/non-food Products $ 4,334.2
$ 4,050.8
$ 283.4
7.0 %


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~

The increase in food/non-food sales for the nine months ended September 30, 2019 was driven primarily by an increase of 7.1% in sales to existing customers, as well as net market share gains, partially offset by the expiration of our distribution agreement with K&G and the transition of certain Rite-Aid stores. The increase in health, beauty & general category sales was driven primarily by sales of alternative nicotine products. We believe, in the near-term, the overall trend toward the increased use of alternative nicotine and smokeless tobacco products will continue and will partially offset the impact of the expected long-term decline of cigarette consumption. However, the regulatory environment surrounding alternative nicotine products is uncertain and the enactment of regulations and other laws at the federal, state and local level could have a material impact on the availability of such products. Sales growth in our OTP category was impacted by a manufacturer shortage of cigars; excluding cigars, OTP sales increased 5.1% compared to the same period in 2018.

~~Net sales of food/non-food products as a percentage of total net sales was 34.6% for the nine months ended September 30, 2019 compared to 32.9% for the same period in 2018.~~

~~Gross Profit.~~ Gross profit for the nine months ended September 30, 2019 increased $43.2 million, or 6.6%, to $693.7 million from $650.5 million for the same period in 2018. The increase in gross profit was driven primarily by incremental sales of food/non-food to existing customers, including strong growth in alternative nicotine products and net market share gains, partially offset by a decline in cigarette cartons sold and $5.2 million of incremental inventory holding gains in 2018 as compared to 2019.

Gross profit margin increased 25 basis points to 5.54% of total net sales for the nine months ended September 30, 2019 from 5.29% for the same period in 2018. The increase in gross profit margin was driven primarily by the shift in sales mix toward higher-margin food/non-food items partially offset by cigarette price inflation.

Our cigarette, candy and excise tax inventory holding gains were $18.7 million for the nine months ended September 30, 2019 compared to $23.9 million for the same period in 2018. We expect cigarette manufacturers will continue to raise prices as carton sales decline in order to maintain or enhance their overall profitability and the various taxing jurisdictions will raise excise taxes to make up for lost tax dollars related to consumption declines.

LIFO expense was $21.7 million for the nine months ended September 30, 2019 compared to $20.0 million for the same period of 2018. Because we value our inventory in the U.S. on a LIFO basis, our gross profit can be positively or negatively impacted depending on the relative level of price inflation or deflation in manufacturer prices as reported in the Bureau of Labor Statistics PPI used to estimate and record our book LIFO expense.

~~The following table provides the components of gross profit (in millions, except percentages)~~⁽¹⁾:

Nine Months Ended Nine Months Ended
September 30, 2019 September 30, 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 $ 210.1
$ 12,515.7
100.0 % — % $ 12,305.6
100.0 % — %
Net sales, less excise taxes
(non-GAAP)⁽²⁾
320.9
9,994.1
79.9
100.0
9,673.2
78.6
100.0
Components of gross profit:
Cigarette inventory holding gains⁽³⁾
$ (3.6 ) $ 12.9
0.10 % 0.13 % $ 16.5
0.13 % 0.17 %
Candy inventory holding gains⁽⁴⁾
5.8
5.8
0.05
0.05
—
—
—
Cigarette tax stamp inventory holding gain⁽⁵⁾
(7.4 ) —
—
—
7.4
0.07
0.08
LIFO expense (1.7 ) (21.7 ) (0.18 ) (0.22 ) (20.0 ) (0.16 ) (0.21 )
Remaining gross profit (non-GAAP)⁽⁶⁾
50.1
696.7
5.57
6.97
646.6
5.25
6.68
Gross profit $ 43.2
$ 693.7
5.54 % 6.94 % $ 650.5
5.29 % 6.72 %


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	~~See reconciliation of net sales, less excise taxes to net sales in “Non-GAAP Financial Information.”~~


~~(3)~~	For the nine months ended September 30, 2019, $11.3 million and $1.6 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. For the same periods in 2018, $14.1 million and $2.4 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively.


~~(4)~~	~~For the nine months ended September 30, 2019, the $5.8 million of candy inventory holding gains was attributable to the U.S.~~


~~(5)~~	~~For the nine months ended September 30, 2018, the cigarette tax stamp inventory holding gain was attributable to the U.S.~~


~~(6)~~	Remaining gross profit is a non-GAAP financial measure, which we provide to segregate the effects of LIFO expense, cigarette inventory holding gains and other items that significantly affect the comparability of gross profit.

Remaining gross profit, a non-GAAP financial measure (see reconciliation of remaining gross profit to gross profit in “Non-GAAP Financial Information”), increased $50.1 million, or 7.7%, to $696.7 million for the nine months ended September 30, 2019 from $646.6 million for the same period in 2018. Remaining gross profit margin, a non-GAAP financial measure (see reconciliation of remaining gross profit margin, as well as an explanation of its significance, in “Non-GAAP Financial Information”) was 5.57% for the nine months ended September 30, 2019 compared to 5.25% for the same period in 2018.

Cigarette remaining gross profit, a non-GAAP financial measure (see reconciliation of cigarette remaining gross profit to cigarette gross profit in “Non-GAAP Financial Information”), decreased $1.0 million, or 0.6%, to $163.1 million for the nine months ended September 30, 2019 from $164.1 million for the same period in 2018. Cigarette remaining gross profit per carton increased 3.6% for the nine months ended September 30, 2019 compared to the same period in 2018, driven primarily by higher manufacturers’ discounts as a result of the increase in cigarette prices.

Food/non-food remaining gross profit, a non-GAAP financial measure (see reconciliation of food/non-food remaining gross profit to food/non-food gross profit in “Non-GAAP Financial Information”), increased $51.1 million, or 10.6%, to $533.6 million for the nine months ended September 30, 2019 from $482.5 million the same period in 2018. Food/non-food remaining gross profit margin, a non-GAAP financial measure (see reconciliation of food/non-food remaining gross profit margin in “Non-GAAP Financial Information”) for the nine months ended September 30, 2019 was 12.31% compared to 11.91% for the same period in 2018. The increase in food/non-food remaining gross profit margin was driven primarily by an increase in sales of higher-margin alternative nicotine products, higher margins in our food and candy categories and our strategic pricing initiatives.

~~For the nine months ended September 30, 2019, our remaining gross profit for food/non-food products was 76.6% of our total remaining gross profit compared to 74.6% for the same period in 2018.~~

~~Operating Expenses.~~ Our operating expenses include costs related to warehousing and distribution, selling, general and administrative expenses and amortization of intangible assets. For the nine months ended September 30, 2019, operating expenses increased by $30.3 million, or 5.1%, to $626.0 million from $595.7 million for the same period in 2018. The increase was due primarily to higher distribution expenses and costs related to the relocation of our headquarters. As a percentage of total net sales, total operating expenses were 5.0% for the nine months ended September 30, 2019 compared to 4.8% for the same period in 2018. Operating expenses were 89.9% of remaining gross profit, a non-GAAP financial ratio (see reconciliation of operating expenses as a percentage of remaining gross profit, as well as an explanation of its significance, in “Non-GAAP Financial Information”) for the nine months ended September 30, 2019, compared to 92.1% of remaining gross profit for the same period in 2018. Operating expenses as a percentage of remaining gross profit was favorably impacted by the sales mix shift to higher-margin food/non-food products.

~~Warehousing and Distribution Expenses~~. Warehousing and distribution expenses increased $21.8 million, or 5.4%, to $426.0 million for the nine months ended September 30, 2019 from $404.2 million for the same period in 2018. The increase in warehousing and distribution expenses for the nine months ended September 30, 2019 was due primarily to higher distribution and workers’ compensation costs. As a percentage of total net sales, warehousing and distribution expenses were 3.4% for the nine months ended September 30, 2019 compared to 3.3% for the same period in 2018. Warehouse and distribution expenses were 61.1% of remaining gross profit, a non-GAAP financial ratio (see reconciliation, as well as an explanation of its significance, in “Non-GAAP Financial Information”) for the nine months ended September 30, 2019, compared to 62.5% of remaining gross profit for the same period in 2018.

~~Selling, General and Administrative Expenses.~~SG&A expenses increased $8.4 million, or 4.6%, for the nine months ended September 30, 2019, to $192.3 million from $183.9 million for the same period in 2018. SG&A expenses for the nine months ended September 30, 2019 included $2.3 million of incremental costs related to the relocation of our headquarters. As a percentage of net sales, SG&A expenses were 1.5% for each of the nine months ended September 30, 2019 and 2018. SG&A was 27.6% of remaining gross profit, a non-GAAP financial ratio (see reconciliation, as well as an explanation of its significance, in “Non-GAAP Financial Information”) for the nine months ended September 30, 2019, compared to 28.4% of remaining gross profit for the same period in 2018.

~~Amortization Expense.~~ ~~Amortization expense increased $0.1 million, or 1.3%, for the nine months ended September 30, 2019, to $7.7 million from $7.6 million for the same period in 2018.~~

~~Interest Expense, Net.~~ Interest expense, net increased $0.2 million to $10.8 million for the nine months ended September 30, 2019, from $10.6 million for the same period in 2018. The increase in net interest expense was due primarily to an increase in the average borrowing rate, partially offset by lower average borrowings. Average borrowings for the nine months ended September 30, 2019 were $295.0 million, with a weighted-average interest rate of 3.6%, compared to average borrowings of $367.9 million and a weighted-average interest rate of 3.0% for the same period in 2018.

~~Foreign Currency Transaction (Losses) Gains, Net.~~ We recognized a foreign currency loss of $0.3 million for the nine months ended September 30, 2019 compared to a gain of $0.5 million for the same period in 2018. The change was due primarily to fluctuations in our net intercompany borrowing positions and the Canadian/U.S. exchange rate.

~~Income Taxes.~~ For the nine months ended September 30, 2019, we recognized an income tax provision of $15.1 million compared with a provision of $11.3 million for the same period in 2018. We currently expect our effective tax rate to be approximately 27% for 2019. The effective tax rate for the nine months ended September 30, 2019 was 26.7% compared to 25.3% for the same period in 2018.

~~Adjusted EBITDA.~~ Adjusted EBITDA, a non-GAAP financial measure (see reconciliation of Adjusted EBITDA to net income in “Non-GAAP Financial Information”), increased $16.7 million, or 13.3%, to $142.4 million for the nine months ended September 30, 2019 from $125.7$29.7 million for the same period last year driven primarily by the growth in ~~food/non-food~~ gross profit resulting from an increase in sales to existing customers and ~~operating expense leverage. The nine months ended September 30, 2019 includes the impact of $18.7 million of inventory holding gains compared to $23.9 million for the same period~~cost leverage in ~~2018.~~SG&A expenses.

Non-GAAP Financial Information

The financial statements in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. Core-Mark uses certain non-GAAP financial measures including (i) Adjusted EBITDA, (ii) net sales, less excise taxes, (iii) remaining gross profit (including cigarette remaining gross profit and food/non-food remaining gross profit), (iv) remaining gross profit margin (including cigarette remaining gross profit margin and food/non-food remaining gross profit margin), (v) remaining gross profit margin less excise taxes (including cigarette remaining gross profit margin less excise taxes and food/non-food remaining gross profit margin less excise taxes), (vi) cigarette remaining gross profit per carton and (vii) operating expenses (and the components thereof) as a

percentage of remaining gross profit. We believe these non-GAAP financial measures provide meaningful supplemental information for investors regarding the performance of our business and facilitate a meaningful period to period evaluation. We also believe these measures allow investors to view results in a manner similar to the method used by our management. Management uses these non-GAAP financial measures in order to have comparable financial results to analyze changes in our underlying business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. These measures may be defined differently than other companies and therefore, such measures may not be comparable to ours. We strongly encourage investors and stockholders to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. These non-GAAP measures are defined as follows:

(i) Adjusted EBITDA is a measure used by management to measure operating performance. Adjusted EBITDA is ~~also among the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our results to other companies. Adjusted EBITDA is~~ equal to net income adding back net interest expense, provision for income taxes, depreciation and amortization, LIFO expense, stock-based compensation expense and net foreign currency transaction gains or losses. See the Adjusted EBITDA tables in our Management’s Discussion and Analysis for additional details on the components of Adjusted EBITDA. We believe Adjusted EBITDA is one of the primary measures used externally by our investors, analysts and peers in our industry for purposes of valuation and comparing our results to other companies.

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(ii) Net sales, less excise taxes is a non-GAAP financial measure which we provide to separate the increase in sales and gross profits due to product sales growth and increases in state, local and provincial excise taxes, which we are responsible for collecting and remitting. 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 taxes result in higher net sales, our overall gross profit percentage may be reduced.

(iii) Remaining gross profit (including cigarette remaining gross profit and food/non-food remaining gross profit), (iv) remaining gross profit margin (including cigarette remaining gross profit margin and food/non-food remaining gross profit margin), (v) remaining gross profit margin less excise taxes (including cigarette remaining gross profit margin less excise taxes and food/non-food remaining gross profit margin less excise taxes), and (vi) cigarette remaining gross profit per carton, are non-GAAP financial measures, which we provide to segregate the effects of LIFO expense, cigarette inventory holding gains and certain other items that significantly affect the comparability of gross profit.

(vii) Operating expenses (and the components thereof) as a percentage of remaining gross profit is a non-GAAP financial measure, which is used by management to measure operating leverage. Although management also uses operating expenses as a percentage of net sales, this metric may be impacted on a comparable basis by, among other items, excise taxes, changes in manufacturers’ prices (including inflation), and our continuing trend in sales mix shift from cigarettes to higher-margin food/non-food items which have substantially lower selling prices.

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The following table reconciles net income to Adjusted EBITDA, toas net income ~~its~~is the most comparable financial measure under U.S. GAAP (in millions, except percentages)⁽¹⁾:


	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30,					%	September 30,					%		March 31,					%
	2019			2018		Change	2019		2018			Change		2020		2019		Change
Net income	$	22.5		$	23.7	(5.1)%	$	41.5	$	33.4		24.3%	Net income	$	4.3	$	1.3	230.8%
Interest expense, net⁽²⁾	4.2			3.4			10.8		10.6				Interest expense, net⁽²⁾	3.5		3.4
Provision for income taxes	8.1			7.4			15.1		11.3				Provision for income taxes	1.8		0.5
Depreciation and amortization	14.9			14.9			45.8		44.5				Depreciation and amortization	15.7		15.4
LIFO expense	7.3			7.2			21.7		20.0				LIFO expense	7.8		7.0
Stock-based compensation expense	3.1			2.0			7.2		6.4				Stock-based compensation expense	2.0		1.9
Foreign currency transaction (gains) losses, net	(0.9		)	0.4			0.3		(0.5		)
Foreign currency transaction losses, net													Foreign currency transaction losses, net	0.2		0.2
Adjusted EBITDA (non-GAAP)	$	59.2		$	59.0	0.3%	$	142.4	$	125.7		13.3%	Adjusted EBITDA (non-GAAP)	$	35.3	$	29.7	18.9%


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	~~Interest expense, net, is reported net of interest income.~~

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

(2) Interest expense, net, is reported net of interest income.

The following tables reconcile net sales to net sales, less excise taxes, and gross profit to ~~net sales, and~~ remaining gross profit to(including cigarette remaining gross profit and food/non-food gross profit), their most comparable financial measures under U.S. GAAP (in millions, except percentages)⁽¹⁾:


	Three Months Ended
	March 31,
	2020			2019
Net sales	$	3,939.3		$	3,754.1
Excise taxes	(770.3)			(768.7)
Net sales, less excise taxes (non-GAAP)	$	3,169.0		$	2,985.4

Gross profit	$	218.4		$	208.2
Cigarette inventory holding gains⁽²⁾	(9.1)			(8.8)




LIFO expense	7.8			7.0
Remaining gross profit (non-GAAP)	$	217.1		$	206.4


Gross profit %	5.54		%	5.55		%
Gross profit % less excise taxes (non-GAAP)	6.89		%	6.97		%
Remaining gross profit % (non-GAAP)	5.51		%	5.50		%
Remaining gross profit % less excise taxes (non-GAAP)	6.85		%	6.91		%

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

(2) For the three months ended March 31, 2020, $7.8 million and $1.3 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. For the three months ended March 31, 2019, $7.4 million and $1.4 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively.

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														Three Months Ended
	Three Months Ended						Nine Months Ended							March 31,
	September 30,						September 30,							2020			2019
	2019			2018			2019			2018
Cigarettes:													Cigarettes:
Net sales	$	4,422.6		$	4,273.2		$	12,515.7		$	12,305.6		Net sales	$	2,582.7		$	2,467.5
Excise taxes	(884.1		)	(920.7		)	(2,521.6		)	(2,632.4		)	Excise taxes	(672.2)			(673.3)
Net sales, less excise taxes (non-GAAP)	$	3,538.5		$	3,352.5		$	9,994.1		$	9,673.2		Net sales, less excise taxes (non-GAAP)	$	1,910.5		$	1,794.2

Gross profit	$	246.6		$	233.8		$	693.7		$	650.5		Gross profit	$	51.9		$	51.3
Cigarette inventory holding gains⁽²⁾	(0.3		)	(5.9		)	(12.9		)	(16.5		)	Cigarette inventory holding gains⁽²⁾	(9.1)			(8.8)
Candy inventory holding gains⁽³⁾	(5.8		)	—			(5.8		)	—
Cigarette tax stamp inventory holding gain⁽⁴⁾	—			(7.4		)	—			(7.4		)

LIFO expense	7.3			7.2			21.7			20.0			LIFO expense	6.9			5.6
Remaining gross profit (non-GAAP)	$	247.8		$	227.7		$	696.7		$	646.6		Remaining gross profit (non-GAAP)	$	49.7		$	48.1

Gross profit %	5.58		%	5.47		%	5.54		%	5.29		%	Gross profit %	2.01		%	2.08		%
Gross profit % less excise taxes (non-GAAP)	6.97		%	6.97		%	6.94		%	6.72		%	Gross profit % less excise taxes (non-GAAP)	2.72		%	2.86		%
Remaining gross profit % (non-GAAP)	5.60		%	5.33		%	5.57		%	5.25		%	Remaining gross profit % (non-GAAP)	1.92		%	1.95		%
Remaining gross profit % less excise taxes (non-GAAP)	7.00		%	6.79		%	6.97		%	6.68		%	Remaining gross profit % less excise taxes (non-GAAP)	2.60		%	2.68		%


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	For the three months ended September 30, 2019, $0.2 million and $0.1 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. For the nine months ended September 30, 2019, $11.3 million and $1.6 million of the cigarette holding gains were attributable to the U.S. and Canada, respectively.


~~(3)~~	~~For the three and nine months ended September 30, 2019, the $5.8 million of candy inventory holding gains was attributable to the U.S.~~


~~(4)~~	~~For the three and nine months ended September 30, 2018, the cigarette tax stamp inventory holding gain was attributable to the U.S.~~

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.


	Three Months Ended
	March 31,
	2020			2019

Food/Non-food:
Net sales	$	1,356.6		$	1,286.6
Excise taxes	(98.1)			(95.4)
Net sales, less excise taxes (non-GAAP)	$	1,258.5		$	1,191.2

Gross profit	$	166.5		$	156.9



LIFO expense	0.9			1.4
Remaining gross profit (non-GAAP)	$	167.4		$	158.3

Gross profit %	12.27		%	12.19		%
Gross profit % less excise taxes (non-GAAP)	13.23		%	13.17		%
Remaining gross profit % (non-GAAP)	12.34		%	12.30		%
Remaining gross profit % less excise taxes (non-GAAP)	13.30		%	13.29		%

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Cigarettes:
Net sales $ 2,880.0
$ 2,874.6
$ 8,181.5
$ 8,254.8
Excise taxes (777.7 ) (816.1 ) (2,213.0 ) (2,326.3 )
Net sales, less excise taxes (non-GAAP) $ 2,102.3
$ 2,058.5
$ 5,968.5
$ 5,928.5

Gross profit $ 52.0
$ 64.9
$ 158.1
$ 171.6
Cigarette inventory holding gains⁽²⁾
(0.3 ) (5.9 ) (12.9 ) (16.5 )
Cigarette tax stamp inventory holding gain⁽³⁾
—
(7.4 ) —
(7.4 )
LIFO expense 5.9
6.3
17.9
16.4
Remaining gross profit (non-GAAP) $ 57.6
$ 57.9
$ 163.1
$ 164.1

Gross profit % 1.81 % 2.26 % 1.93 % 2.08 %
Gross profit % less excise taxes (non-GAAP) 2.47 % 3.15 % 2.65 % 2.89 %
Remaining gross profit % (non-GAAP) 2.00 % 2.01 % 1.99 % 1.99 %
Remaining gross profit % less excise taxes (non-GAAP) 2.74 % 2.81 % 2.73 % 2.77 %


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	For the three months ended September 30, 2019, $0.2 million and $0.1 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. For the nine months ended September 30, 2019, $11.3 million and $1.6 million of the cigarette holding gains were attributable to the U.S. and Canada, respectively.


~~(3)~~	~~For the three and nine months ended September 30, 2018, all cigarette tax stamp inventory holding gains were attributable to the U.S.~~

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Food/Non-food:
Net sales $ 1,542.6
$ 1,398.6
$ 4,334.2
$ 4,050.8
Excise taxes (106.4 ) (104.6 ) (308.6 ) (306.1 )
Net sales, less excise taxes (non-GAAP) $ 1,436.2
$ 1,294.0
$ 4,025.6
$ 3,744.7

Gross profit $ 194.6
$ 168.9
$ 535.6
$ 478.9
Candy inventory holding gains⁽²⁾
(5.8 ) —
(5.8 ) —
LIFO expense 1.4
0.9
3.8
3.6
Remaining gross profit (non-GAAP) $ 190.2
$ 169.8
$ 533.6
$ 482.5

Gross profit % 12.62 % 12.08 % 12.36 % 11.82 %
Gross profit % less excise taxes (non-GAAP) 13.55 % 13.05 % 13.30 % 12.79 %
Remaining gross profit % (non-GAAP) 12.33 % 12.14 % 12.31 % 11.91 %
Remaining gross profit % less excise taxes (non-GAAP) 13.24 % 13.12 % 13.26 % 12.88 %

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~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	~~For the three and nine months ended September 30, 2019, the $5.8 million of candy inventory holding gains were attributable to the U.S.~~

The following table provides operating expenses as a percentage of remaining gross profit (in millions, except percentages)⁽¹⁾:


	Three Months Ended
	March 31,
	2020			2019
Gross profit	$	218.4		$	208.2
Cigarette inventory holding gains⁽²⁾	(9.1)			(8.8)


LIFO expense	7.8			7.0
Remaining gross profit (non-GAAP)	$	217.1		$	206.4

Warehousing and distribution expenses	$	142.4		$	134.2
Selling, general and administrative expenses	63.9			65.9
Amortization of intangible assets	2.3			2.7
Total operating expenses	$	208.6		$	202.8

Warehouse and distribution expense as a percentage of remaining gross profit (non-GAAP)	65.6		%	65.0		%
Selling, general and administrative expense as a percentage of remaining gross profit (non-GAAP)	29.4		%	31.9		%
Amortization of intangible assets as a percentage of remaining gross profit (non-GAAP)	1.1		%	1.3		%
Total operating expense as a percentage of remaining gross profit (non-GAAP)	96.1		%	98.3		%

(1) Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Gross profit $ 246.6
$ 233.8
$ 693.7
$ 650.5
Cigarette inventory holding gains⁽²⁾
(0.3 ) (5.9 ) (12.9 ) (16.5 )
Candy inventory holding gains⁽³⁾
(5.8 ) —
(5.8 ) —
Cigarette tax stamp holding gains⁽⁴⁾
—
(7.4 ) —
(7.4 )
LIFO expense 7.3
7.2
21.7
20.0
Remaining gross profit (non-GAAP) $ 247.8
$ 227.7
$ 696.7
$ 646.6

Warehousing and distribution expenses $ 148.6
$ 137.6
$ 426.0
$ 404.2
Selling, general and administrative expenses 61.8
58.8
192.3
183.9
Amortization of intangible assets 2.3
2.5
7.7
7.6
Total operating expenses $ 212.7
$ 198.9
$ 626.0
$ 595.7

Warehouse and distribution expense as a percentage of remaining gross profit (non-GAAP) 60.0 % 60.4 % 61.1 % 62.5 %
Selling, general and administrative expense as a percentage of remaining gross profit (non-GAAP) 24.9 % 25.8 % 27.6 % 28.4 %
Amortization of intangible assets as a percentage of remaining gross profit (non-GAAP) 0.9 % 1.1 % 1.1 % 1.2 %
Total operating expense as a percentage of remaining gross profit (non-GAAP) 85.8 % 87.4 % 89.9 % 92.1 %


~~(1)~~	~~Amounts and percentages have been rounded for presentation purposes and may differ from unrounded results.~~


~~(2)~~	For the three months ended September 30, 2019, $0.2 million and $0.1 million of the cigarette inventory holding gains were attributable to the U.S. and Canada, respectively. For the nine months ended September 30, 2019, $11.3 million and $1.6 million of the cigarette holding gains were attributable to the U.S. and Canada, respectively.


~~(3)~~	~~For the three and nine months ended September 30, 2019, the $5.8 million of candy inventory holding gains were attributable to the U.S.~~


~~(4)~~	~~For the three and nine months ended September 30, 2018, all cigarette tax stamp inventory holding gains were attributable to the U.S.~~

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Liquidity and Capital Resources

Our cash and cash equivalents were ~~$26.0~~$26.0 million and ~~$27.3~~$14.1 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Our liquidity requirements arise primarily from our working capital needs, capital expenditures, debt service requirements for our revolving credit facility (“Credit Facility”), income taxes, repurchases of common stock and dividend payments. We have historically funded our liquidity requirements through our cash flows from operations and external borrowings. For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, our cash flows ~~used in~~provided by operating activities were ~~$111.1~~$32.5 million. Subject to borrowing base limitations, we had ~~$231.9~~$408.3 million of borrowing capacity available under our Credit Facility, excluding our expansion feature of $200.0 million, as of ~~September 30, 2019.~~March 31, 2020.

~~Based on our anticipated cash needs, availability under our Credit Facility and~~We believe that we have sufficient liquidity to manage through the ~~scheduled maturity~~duration of the COVID-19 crisis. We are exposed to potentially increased credit risk as a result of this crisis. While the vast majority of our ~~debt,~~customers are convenience retailers that continue to operate as essential businesses, our customers include smaller independent convenience retailers that may face liquidity constraints as a result of reduced store traffic. Our customers also include non-convenience store formats including hotel gift shops, casinos, tobacco shops, schools, airport concessions and other specialty and small format stores that carry convenience products. Some of these customers have temporarily ceased operations due to government-imposed restrictions while others have seen a material decline in store traffic.

We have taken actions to help preserve liquidity, including reducing operating costs to better align with the current sales volume trends, suspending employer contributions to our 401(k) plan, making material revisions to our vacation policies, adjusting inventory levels to align with sales volumes while seeking to maximize vendor incentives, closely managing our accounts receivable and reducing our capital expenditures. Additionally, we have elected to temporarily suspend stock repurchases under the Program.

Given our financial strength coming into the pandemic and ample availability of capital, we expect ~~that our~~to be able to maintain adequate liquidity through the current ~~liquidity will be sufficient~~environment subject to ~~meet our anticipated operating needs during~~ the ~~next twelve months.~~duration of COVID-19 and shelter-in-place orders.

Cash Flows from Operating Activities

Our cash flows from operating activities, including net income, net non-cash additions to net income and changes in operating assets and liabilities (working capital), ~~used~~provided net cash of ~~$111.1~~$32.5 million for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$192.1~~$175.2 million of net cash provided for the same period in ~~2018,~~2019, a decrease of ~~$303.2~~$142.7 million. The decrease was primarily attributable to changes in working capital during the comparative periods.

Working capital used cash of ~~$233.9~~$0.8 million for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~provided $82.8~~$146.3 million of cash provided for the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, a decrease of ~~$316.7~~$147.1 million. These contributions for the comparative periods were impacted primarily by an increase in inventory levels, among other ~~items, inventory levels and an increase of deposits, prepayments and other non-current assets due to the prepayments for cigarette vendors.~~items. The inventory levels were higher in ~~2019~~2020 due primarily to ~~expected future increases~~a strategic decision to increase cigarette inventory in ~~cigarette manufacturers’ prices, which occurred earlier~~response to the temporary facility closure of one of our largest suppliers toward the end of the first quarter, in ~~2018.~~connection with COVID-19.

Our cash flows from operating activities were impacted by the following movements in working capital (in millions):


	Nine Months Ended										Three Months Ended
	September 30,										March 31,
	2019			2018			Change				2020		2019		Change
Accounts receivable, net	$	(29.9	)	$	9.9		$	(39.8	)	Accounts receivable, net	$	12.0	$	5.4	$	6.6
Other receivables, net	(21.6		)	(2.1		)	(19.5		)	Other receivables, net	(5.5)		8.2		(13.7)
Inventories, net	(199.5		)	14.1			(213.6		)	Inventories, net	(102.4)		180.7		(283.1)
Deposits, prepayments and other non-current assets	(22.9		)	53.9			(76.8		)	Deposits, prepayments and other non-current assets	31.8		(4.1)		35.9
Accounts payable	74.2			49.2			25.0			Accounts payable	79.5		29.9		49.6
Cigarette and tobacco taxes payable	(61.3		)	(71.9		)	10.6			Cigarette and tobacco taxes payable	(17.9)		(75.8)		57.9
Claims, accrued and other long-term liabilities	27.1			29.7			(2.6		)	Claims, accrued and other long-term liabilities	1.7		2.0		(0.3)
Net cash (used in) provided by changes in working capital	$	(233.9	)	$	82.8		$	(316.7	)	Net cash (used in) provided by changes in working capital	$	(0.8)	$	146.3	$	(147.1)

Cash Flows from Investing Activities

Our investing activities used net cash of ~~$20.9~~$5.8 million for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to net cash used of ~~$18.9~~$6.3 million for the same period in ~~2018.~~2019. Capitalization of software and related development costs were $0.8 million and $1.4 million for the three months ended March 31, 2020 and 2019, respectively. Additions to property, plant and

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equipment were ~~$15.3~~$5.0 million and ~~$14.9~~$5.1 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. WeDue to COVID-19, we expect our capital expenditures for ~~2019~~2020 to be approximately ~~$25.0~~$30 million ~~which will be utilized primarily~~ for ~~maintenance and expansion projects.~~the year.

Cash Flows from Financing Activities

Our financing activities ~~provided~~used net cash of ~~$131.2~~$15.2 million for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to net cash used of ~~$177.7~~$169.8 million for the same period in ~~2018, an increase~~2019, a decrease of ~~$308.9~~$154.6 million. Net ~~borrowings~~repayments of our Credit Facility during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 were ~~$168.0~~$11.8 million compared to net repayments of ~~$138.2~~$158.5 million for the same period in ~~2018.~~2019. The ~~increase~~decrease in Credit Facility ~~borrowings~~repayments was due primarily to the increase in ~~part due to working capital movements described above.~~inventory.

Our Credit Facility

We have a Credit Facility with a capacity of $750.0 million as of ~~September 30, 2019,~~March 31, 2020, limited by a borrowing base consisting of eligible accounts receivable and inventories. The Credit Facility expires in March 2022 and has an expansion feature which

permits an increase of up to $200.0 million, subject to borrowing base requirements. All obligations under the Credit Facility are secured by first-priority liens on substantially all of our present and future assets. The terms of the Credit Facility permit prepayment without penalty at any time (subject to customary breakage costs with respect to London Interbank Offered Rate or Canadian Dollar Offered Rate based loans prepaid prior to the end of an interest period).

Amounts related to the Credit Facility are as follows (in millions):


	September 30,		December 31,			March 31,		December 31,
	2019		2018			2020		2019
Amounts borrowed, net	$	488.0	$	320.0	Amounts borrowed, net	$	313.0	$	324.8
Outstanding letters of credit	16.7		16.7		Outstanding letters of credit	19.7		16.7
Amounts available to borrow⁽¹⁾	231.9		328.9		Amounts available to borrow⁽¹⁾	408.3		341.7

(1) Subject to borrowing base limitations, and excluding expansion feature of $200.0 million.

Average borrowings during the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 were ~~$371.1~~$336.4 million, ~~and $295.0 million, respectively,~~ with outstanding amounts borrowed at any one time ranging from ~~$141.7~~$151.5 million to ~~$489.0~~$499.3 million over the ~~nine-month~~three-month period. For the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, average borrowings were ~~$326.9~~$277.6 million, ~~and $367.9 million, respectively,~~ with outstanding amounts borrowed at any one time ranging from ~~$232.0~~$160.0 million to ~~$575.0~~$390.0 million over the ~~nine-month~~three-month period.

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Off-Balance Sheet Arrangements

There have been no material changes to the information provided in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the SEC on March ~~1, 2019,~~2, 2020, regarding off-balance sheet arrangements.

~~Critical Accounting Policies and Estimates~~

There have been no significant changes during this quarter to our critical accounting policies as discussed in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 1, 2019.


~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk disclosures set forth in Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the SEC on March ~~1, 2019,~~2, 2020, did not change materially during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on our evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September 30, 2019,~~March 31, 2020, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2019~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting.

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PART II. OTHER INFORMATION


~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~

ITEM 1.LEGAL PROCEEDINGS

The Company is subject to certain legal proceedings, claims, investigations and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both (a) probable that the liability has been incurred and (b) the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. In the opinion of management, the outcome of pending litigation is not expected to have a material effect on the Company’s results of operations, financial condition or liquidity.


~~ITEM 1A.~~	~~RISK FACTORS~~

ITEM 1A.RISK FACTORS

~~There~~Other than the risk factor set forth below, there have been no material changes from the Risk Factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the SEC on March ~~1, 2019.~~2, 2020.

The COVID-19 pandemic and the responsive actions taken by governments and others to mitigate its spread have significantly impacted worldwide economic conditions and could have a material adverse effect on our operations and business.

The novel coronavirus (or “COVID-19”) pandemic and the responsive actions taken by governments and others, including mandatory and voluntary closures, shelter-in-place orders and social distancing protocols, began to adversely impact our operations late in the first quarter of 2020 and are likely to continue to affect our business for an indeterminate amount of time. These actions could materially adversely affect our ability to adequately staff and maintain our operations, cause disruptions in the supply chain and impact our ability to maintain adequate inventory and liquidity. While we and the vast majority of our customers have been permitted to continue to operate as essential businesses, the unprecedented impact of COVID-19, including an increase in the level of shelter-in-place orders by states, provinces, cities and counties, has resulted in a significant downturn in miles driven, causing a substantial decline in convenience retail store visits across North America. In addition to adversely affecting our revenues, the decrease in convenience retail store visits could also negatively impact our customers’ ability to pay for our goods and services or cause some customers’ businesses to fail. COVID-19 has produced significant shifts in the mix of our business with a larger decline in food/non-food sales relative to cigarette sales, which we anticipate will result in lower gross margins until the impacts of COVID-19 starts to moderate. As we cannot predict the duration or scope of the COVID-19 pandemic, the anticipated negative financial impact to our operating results cannot be reasonably estimated, but could be material and last for an extended period of time.


~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the repurchases of shares of common stock during the three months ended ~~September 30, 2019~~March 31, 2020 (in millions, except share and per share data):


Calendar month in which purchases were made:	Total Number of Shares Repurchased⁽¹⁾	Average Price Paid per Share		Total Cost of Shares Purchased as Part of Publicly Announced Programs⁽²⁾		Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs⁽³⁾
January 1, 2020 to January 31, 2020	—	$	—	$	—	$	60.0
February 1, 2020 to February 29, 2020	—	—		—		60.0
March 1, 2020 to March 31, 2020	235,344	23.17		5.4		54.6
Total repurchases for the three months ended March 31, 2020	235,344	23.17		$	5.4	54.6

(1) All purchases were made as part of the stock repurchase program (the “ Program”) announced on February 24, 2020.

(2) Includes related transaction fees.

(3) Shares repurchased under the Program were made in the open market and the timing and amount of the purchases were based on market conditions, our cash and liquidity requirements, relevant securities laws, and other factors. The Program may be discontinued or amended at any time. The Program has no stated expiration date and terminates when the amount authorized has been expended or the Board of Directors withdraws its authorization. On April 14, 2020, the Company announced that the Program would be temporarily suspended due to the volatility related to COVID-19.

Calendar month
in which purchases were made:

Total Number of Shares Repurchased⁽¹⁾
Average Price Paid per Share
Total Cost of Shares Purchased as Part of Publicly Announced Programs⁽²⁾

Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs⁽³⁾
July 1, 2019 to July 31, 2019 —
$ —
$ —
$ 22.4
August 1, 2019 to August 31, 2019 104,929
32.84
3.4
19.0
September 1, 2019 to September 30, 2019⁽⁴⁾
145,996
32.13
4.7
14.3
Total repurchases for the three months ended September 30, 2019 250,925
32.42
$ 8.1
14.3


~~(1)~~	~~All purchases were made as part of the stock repurchase program (“the Program”) announced on August 28, 2017.~~


~~(2)~~	~~Includes related transaction fees.~~

~~(3)~~

Shares repurchased under the Program were made in the open market and the timing and amount of the purchases were based on market conditions, our cash and liquidity requirements, relevant securities laws, and other factors. The Program may be discontinued or amended at any time. The Program has no stated expiration date and terminates when the amount authorized has been expended or the Board of Directors withdraws its authorization.


~~(4)~~	~~As of September 30, 2019, amounts include 16,500 shares and $0.5 million of repurchase costs related to shares purchased, but not yet settled.~~

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ITEM 6.EXHIBITS


~~ITEM 6.~~	~~EXHIBITS~~



Exhibit No.						Description

3.1						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).

3.2						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 May 21, 2015).

3.3						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).

31.1						Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350*.

32.2						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350*.

101.INS						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.

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101

*						This Exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing pursuant to Item 601 of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Core-Mark Holding Company, Inc.

(Registrant)

~~November~~May 7, ~~2019~~2020

By:

/s/ CHRISTOPHER M. MILLER

Name:

Christopher M. Miller

Title:

Senior Vice President, Chief Financial Officer

(Principal Financial and Accounting Officer and Authorized Signatory)



Assets	Classification	September 30, 2019
Operating	Operating lease ROU assets	$	208.5
Finance	Property and equipment, net	49.1
Total leases		$	257.6

Liabilities
Current:
Operating	Operating lease liabilities	$	40.3
Finance	Accrued liabilities	6.9
Non-current:
Operating	Long-term operating lease liabilities	181.2
Finance	Long-term debt	47.9
Total lease liabilities		$	276.3



	Operating leases			Finance leases			Total
2019	$	12.8		$	2.4		$	15.2
2020	48.7			9.2			57.9
2021	41.8			8.6			50.4
2022	33.5			8.5			42.0
2023	26.2			8.2			34.4
2024 and thereafter	103.4			29.5			132.9
Total lease payments	266.4			66.4			332.8
Less: interest	(44.9		)	(11.6		)	(56.5		)
Present value of lease liabilities	$	221.5		$	54.8		$	276.3



	Nine Months Ended
	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases	$	38.5
Operating cash flows used by finance leases	$	1.5
Financing cash flows used by finance leases	$	3.6
Lease liabilities arising from obtaining new ROU assets:
Operating leases	$	7.0
Finance leases	$	29.3



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