Source: The Colorful Fool.
Core-Mark Holding Company, Inc. (NASDAQ: CORE)
Q1 2021 earnings call
May 7, 2021, 9.00. ET
Content:
- Prepared remarks
- questions and answers
- Call participant
Prepared Notes:
operator
Welcome to Core-Mark's Investor Call for the first quarter of 2021. My name is Karen and I will be your operator for today's call. (Operation manual)
I will now transfer the call to David Lawrence. David, you can start.
Lawrence David Jackson – Vice President for Treasury and Investor Relations.
Thank you and good morning everyone. Today's call is being led by Scott McPherson, our President and Chief Executive Officer. and Chris Miller, our Chief Financial Officer. Before I transfer the call to Scott, I would like to point out that Core-Mark intends to use the safe harbor provisions of the Private Securities Litigation Reform Act, as stated in the earnings notice filed this morning. Please be aware that today's comments may contain forward-looking statements that involve risks and uncertainties and that actual results could differ materially from those expressed or implied in such statements.
Some of these risks are fully described in the company's SEC filings, including our Annual Report on Form 10-K. The company is under no obligation to update such forward-looking statements. Additionally, we will refer you to certain non-GAAP financial measures with this call. You will find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures and other related information, including a discussion of why we find these measures useful to investors in our earnings notice and our quarterly report on Form 10-K.
I'm going to transfer the call to Scott now.
Scott E. McPherson – President, Chief Executive Officer
Thank you, David, and thank you to everyone who joined us today for our first quarter call. We delivered strong results for the quarter that were in line with our expectations and reflect the continued hard work and dedication within the CoreMark family. While the impact of COVID-19 on consumer behavior continues to affect our revenue mix and margins. We were pleased to see comparable sales growth in both cigarettes and non-cigarettes for the quarter. Our sales growth reflects a steady recovery from the pandemic's high points, with positive non-cigarette sales growth in the first quarter since COVID-19 in North America. While February sales were impacted by extreme winter weather that hit a significant portion of the United States, Core-Mark saw strong growth due to improved sales trends in our fresh food and candy categories. On a sequential quarterly basis, we increased our total customer base by 150 branches, reflecting positive momentum in our efforts to increase market share.
This growth was aided by the early benefits of our sales force reorganization, which we discussed at our call last quarter. From a cost perspective, we continue to benefit from efficiency gains in our operational performance metrics, including dice per route for delivery and throughput, as well as year-to-year targeted effort, leverage and costs as a percentage of our remaining gross profit in disciplines. As we turn to our strategic initiatives from a growth perspective, I am pleased with our momentum from the first quarter and remain optimistic about the sustained mix and margin recovery. From a category management perspective, we are continuing to roll out our national supply chain partnership with Fresh and Ready Foods using our new refrigerated redistribution center on the west coast. We are now supplying 11 distribution centers with top quality, consistent fresh food and we are still on track to bring this selection of products to all customers in the bottom 48 countries by the end of the year.
We have also launched the first phase of our private label snacks and candy offering in conjunction with the curated Core Mark product lines that are now being sold in our US divisions. On the retail technology side, our partnership with PDI continues to grow in importance. We recently signed a customer with 200 branches for the PDI branded loyalty platform and currently have a number of other chains in use. We also use PDI to bring technology to our independent customers as our exclusive top-off loyalty solution gives independent operators access to a comprehensive loyalty offering and mobile application that we will be rolling out over the next two weeks. In addition, we have over 225 customers using the PDI-Scan data aggregation tool and the cloud-based point-of-sale solution. From a cost leverage perspective, we recently opened our new Enterprise Business Services Center, located in the same building as our corporate headquarters in Westlake, Texas.
This center will host several functional groups including accounts receivable and accounts payable, our departmental services, finance and accounting team, and our recently centralized customer service organization. Centralizing these functional groups not only improves cost efficiency, but also provides a better view of key operational metrics that are geared towards improved performance. In the case of customer service, the center offers better visibility and real-time metrics to improve our customer experience and satisfaction. As we implement our strategic initiatives, we are taking steps to mitigate the ongoing challenges in the supply chain. In particular, we are working closely with our suppliers to improve input fill rates, which are almost 10% below historical norms. Through a combination of strategic investments and inventory, as well as creative sourcing, we work hard to offer our customers the best fill rates in the industry in a very challenging environment.
In addition, at the beginning of our midsummer season, in view of the difficult labor market in terms of filling warehouse and driver positions, we are actively meeting the expected challenges and the seasonal staffing. We have put in place a robust digital recruiting strategy for departments and territories across the country facing the greatest hiring challenges and we continue to aggressively recruit talent for the CoreMark team. In terms of our financial performance for the quarter, we saw sales growth in both cigarettes and non-cigarettes, adjusted for one day less sales and the impact of foreign exchange rates. We saw a sustained rebound in our remaining gross profit, which is our third consecutive quarter of margin improvement. Our operating costs were lower than in the same quarter of the previous year. This reflected costs, improvements in leverage, and inventory and shipping costs, and benefited from continued productivity gains and discipline in cost management.
Our adjusted EBITDA for the first quarter of $ 44.3 million included a gain from a government excise tax increase that was partially offset by an unrelated excise tax reserve. Excluding that impact and the benefit of our cigarette earnings over the previous year, we achieved adjusted EBITDA above Q1 2020, the quarter when the pantry was loaded in March and the COVID pandemic peaked. In terms of our capital allocation strategy and three-year shareholder return plan of $ 375 million, we today announced a quarterly dividend of $ 0.13 per share. We continue to actively evaluate potential M&A and are confident that this will be an important part of our growth algorithm over the next 12 to 18 months. At the beginning of the second quarter, we also expect to leverage our Board-approved share buyback plan. We will continue to focus on these three levers to further optimize value for our shareholders. In summary, our results for the quarter reflect the continued implementation of our strategic initiatives, the steady recovery from the effects of COVID-19, and the positive momentum in the second quarter.
I will now transfer the call to Chris to discuss the financial details of our Q1 results.
Christopher M. Miller – Senior Vice President and Chief Financial Officer
Thanks Scott. Good morning everyone. I'll start with our Q1 performance, provide an update on liquidity, and wrap up some additional comments on the 2021 projections. Despite the COVID-contaminated pantry, we achieved solid year-over-year results in the first quarter. 19 that benefited the first quarter of last year. Net income increased to $ 8.5 million from $ 4.3 million a year ago. Diluted earnings per share for the quarter increased to $ 0.19 from $ 0.9 a year ago. Excluding LIFO costs, indicated earnings per share rose approximately 64% to $ 0.36 per share from $ 0.22 last year. We are pleased with our operating results for the first quarter and our continued strength in increasing operational efficiency and effective cost management.
Total revenue for the quarter decreased 0.2% to $ 3.9 billion. Adjusted for the impact of one less sales day on foreign exchange, total sales rose approximately 1% in the quarter. Total cigarette sales increased 1.2% on a like-for-like basis driven by cigarette price inflation, which was partially offset by a decrease in total carton sales. We saw a slight decline in cigarette packs in the same store in the first quarter, driven by growth in January that was offset by monthly declines in February and March. Our March results reflected the 4.6% decline in cigarette box sales in the same store. However, it is against the 5.6% increase in March 2020 that benefited from the loading of COVID pantries. Sales excluding cigarettes increased 0.2% on a like-for-like basis, driven by growth in all commodities except food and candy.
Despite the ongoing mixed challenges related to the pandemic, as Scott mentioned, we've had the first quarter of revenue growth in the same business since the start of COVID-19 with improved trends across all major categories. The remaining gross profit margin for the full quarter decreased 16 basis points from 5.51% to 5.35%. This reflects both the continued shift in the mix towards lower-margin cigarettes and the lower-margin sales mix for non-cigarettes. However, the 16 basis points declined in the first quarter from the 21 basis points decline in the fourth quarter of 2020, reflecting a consistent improvement in our margins from a peak decline of 58 basis points in the second quarter of last year during the height of the pandemic. Remaining gross profit margins excluding cigarettes also showed continuous improvement over the sequential quarter, declining 30 basis points from 51 basis points in the fourth quarter of last year and a high of 81 basis points in the second quarter of last year.
Our mix within our non-cigarette categories was responsible for most of the decline in non-cigarette margins. Our cigarette inventory profit was $ 12.5 million for the first quarter compared to $ 9.1 million for the same period last year. The increase in cigarette inventory increases was mainly due to the timing of price increases by cigarette manufacturers in the first quarter. In addition to gains on cigarette inventory, we earned $ 8.3 million on a price increase for cigarette tax stamps in Colorado. The company took incredible advantage of this opportunity and added value to our shareholders. This benefit was partially offset by an expense of $ 3.8 million related to an Ontario excise tax claim. Moving to operating expenses, total operations decreased $ 5.2 million, or 2.5%, to $ 203.4 million for the quarter. The decrease in operating costs includes a 3.6% reduction in our storage and delivery costs and a 0.8% reduction in SG&A costs.
SG&A expenses for the first quarter of last year included the benefit of a lower $ 2.1 million employee bonus expense that came with uncertainty about the impact of COVID-19. The share of multiple operating expenses in remaining gross profit increased from 96.1% in the first quarter of 2020 to 96.8% in the first quarter of this year. We have delivered 30 basis points of operating costs, leverage improvements in inventory and delivery to further increase efficiency. Without the effects of the employee bonus performance last year, the leverage effect of operating costs on SG&A costs would have improved by approximately 30 basis points in the first quarter of 2021. Interest expense for the first quarter of this year is approximately $ 700,000 related to the OTP tax claim I mentioned earlier. Without this item, the interest expense would have been $ 2.4 million, slightly higher than our fourth quarter 2020 interest expense of $ 2.1 million.
Starting with cash flow and the balance sheet, we had free cash flow of $ 36.1 million compared to $ 26.7 million last year and ended the quarter with $ 259 million from our ABL. As Scott mentioned earlier, we will be maintaining higher food and non-food inventories at the beginning of the second quarter to provide higher fill rates to our customers as the manufacturers supply chain continues to be badly hit by the pandemic. Regarding our outlook for the year, we reiterated our guidance for 2021 in the press release filed this morning. While we benefited from higher increases in cigarette inventories in the first quarter compared to the same period last year, the increases were, as already mentioned, mainly due to the timing of the price increases by the cigarette manufacturers.
We are not anticipating any further price increases this year, so we have not adjusted our points of sale to cigarette inventory profits of $ 28 million for the year as a whole. And while the gain from increasing cigarette tax stamps was not reflected in our 2021 guidelines. This gain was partially offset by the provision of $ 3.8 million against the OTP tax claim. Given how early we are in 2021, we are not currently revising our guidelines. In conclusion, we are satisfied with our performance in the first quarter, continue to implement our strategic initiatives and remain optimistic about the current pace of recovery we are seeing in the market.
Thank you all. I will now return the call to the operator. So open the line for questions.
Questions and answers:
operator
(Instruction manual) And we have our first question from Ben Bienvenu from Stephens.
Ben Bienvenu – Stephens – analyst
So I'm happy to hear that non-zig comps have turned positive. I'm curious, how does that compare to 2019? You mentioned that March is a kind of camp window. Maybe it's actually against an unusually strong base, but I'm just curious how close we will be to normal when we return to that type of trendline?
Scott E. McPherson – President, Chief Executive Officer
Yeah, that's a good question, Ben. We spent some time dissecting March 19th and if you remember we had two big weeks, two and three, and then a big drop in the fourth week of March 19 – or no, in & # 39; 20 , I am sorry. And so, & # 39; 20 was really a pretty good comp month overall. And if you look back on March then we obviously had increases of & # 39; 19 versus & # 39; 20. So that's my way of seeing it, we've seen it compared to & # 39; 20 and & # 39; 20, although there have been some ups and downs, a pretty stable month. And we were up in every category in March. The food was basically flat, but every other category was on. So we saw really good momentum in March. Obviously, the end of the quarter in February wasn't as strong there due to the winter storm and some other impact. But from March onwards there is a really positive dynamic.
Ben Bienvenu – Stephens – analyst
Large. I want to come back to this as I think back to your previous growth drivers, vendor consolidation, and the focus marketing initiative. I wonder how disruptive COVID was to this process. Did you continue to work on surveys and guide your customers through the range and prices? Once out of COVID, have acceptance rates changed from the recommendations you made by FMI and possibly some changes in consumer behavior regarding traffic patterns and the way they shop in-store? Have your recommendations changed? I just want to get a sense of how we're getting back to normal in order to get this compound engine of growth going again.
Scott E. McPherson – President, Chief Executive Officer
Yeah, that's a good question, Ben. I would say it would be naive to believe that COVID has no influence. I mean, it affected a number of FMs, not dramatically, but definitely them. And I think in a way, just that commitment to being in the store all the time and having that commitment when you do an FMI and communicate an FMI. Our acceptance rates also fell slightly in the past year. On the positive side, we were able to really upgrade not only FMI, but also our tools for category management last year. We are now using Blue Yonder. And our ability to provide customers with schematic information is many times better than it was a year ago. I think we've come a long way. And then, the other tools we added to really help them skip payment solutions and PDI. From a loyalty point of view, we've added a lot of tools to the toolbox. And then I'm also very encouraged by the early results of our sales organization in the first quarter as they are running. So yeah, I think last year was affected by that, but I think it also allowed us to really reposition and retool ourselves.
Ben Bienvenu – Stephens – analyst
All right, great. And then another for me, and then I hop back in line. You talked about fill rates, you talked about building inventory to isolate yourself from the challenges of the supply chain. How noticeable are delivery errors? Are there any sales risks this year? And how much of that do you think has to do with COVID absenteeism as opposed to potentially stimulating absenteeism?
Scott E. McPherson – President, Chief Executive Officer
Yes. So Ben, to give you a little overview of the fill rates. In the past we no longer have about 1% manufacturers in stock. Really, since the height of COVID and the fact that it hasn't gotten much better to date, we have between five and 10% of manufacturers out of stock depending on the manufacturer and region. So it definitely has a significant impact on our inbound. And as we discussed in our prepared notes, we build inventory, we use secondary sourcing where we have to. In some situations, customers change items on their schematic to find a good replacement because the supply chain for those items is just not good. So the supply chain was certainly a challenge. I think it's going to be a challenge for much of this year. And then, the second question in your stimulus question, what exactly – can you repeat that again, Ben?
Ben Bienvenu – Stephens – analyst
You mentioned that COVID disrupts the supply chain and presumably causes absenteeism. We have also seen this in many of our other companies, but we also hear companies talking about all the impulses in the system that also contribute to absenteeism.
Scott E. McPherson – President, Chief Executive Officer
Absolutely again, in our remarks we always talk about drivers and bearings that we have had throughout my career. But I think I called another investor a few days ago. I heard someone ask, they said they heard four or five investor calls and they had never heard the noise about staff and labor availability that they were hearing. And I would say that's true. I think the unemployment situation, that people are able to resort to employment, and the rates they pull, combined with incentives, make it really, very difficult for the warehouse and transport workers. So we are more concerned with people and attitudes than in the last three or four years combined. It's definitely a challenge. And I think that definitely has an impact on the supply chain.
operator
We have our next question from Kelly Bania at BMO Capital.
Kelly Bania – BMO Capital – Analyst
Maybe just curious what gives you a break to increase the guide? I understand that the tax stamp profit was partially offset and maybe closer to $ 5 million instead of $ 8 million on a net basis. But I think you have planned an EBITDA that is roughly the same as last year? And so this quarter just seems to start stronger than expected. So just curious if there are a thing or two that stand out to give you a break, or if it's just too early in the year?
Scott E. McPherson – President, Chief Executive Officer
First of all, Kelly, I would say it gives us a lot of confidence. That was definitely a shot in the arm. And we have a lot of confidence in the year. That said, we definitely built inflation into our plan. I wouldn't say we specifically built in a Colorado tax hike, but it's probably the first quarter. It's our smallest quarter of earnings of the year. It wasn't our historical pattern to make changes in leadership after the first quarter. So we'll definitely look back at this in the second quarter and decide what we want to do then.
Kelly Bania – BMO Capital – Analyst
OK. And in terms of fill rates, each color in certain categories that you see more – and how does that affect your sales? Just an update on this point?
Scott E. McPherson – President, Chief Executive Officer
I would say if there is one category that is likely to stand out, it is cigars. Cigar fill rates were a challenge before COVID and a disproportionate challenge after COVID. Other than that, it's surprising, Kelly. There are different categories and not just smaller manufacturers. They are some of our major manufacturers. So we have a dozen manufacturers who make up a large part of this delta. And of course, these are the ones that we really focus on and work on every day. But it's not a specific category other than cigars.
Kelly Bania – BMO Capital – Analyst
OK. That’s helpful. And I think only on the subject of inflation can you add another quarter to help us understand what you hear from manufacturers and how that compares to what you see in your plan? Are there any further price increases in the second half of the year? And could that be a tailwind that goes beyond what you expected? Or do you expect that? How do you expect this to affect you?
Scott E. McPherson – President, Chief Executive Officer
Yes, I think we might have expected inflation a little higher this year than in the past. But I wouldn't say that we have planned something that is disproportionate. I would say that obviously everyone hears a lot of noise about inflation. I would say that other than the rise in cigarette prices, we saw no significant signs of any other product inflation in the first quarter. So I assume there will be some. I assume we might get some tailwind as the year progresses, but we haven't seen much yet. Are you still there kelly
Kelly Bania – BMO Capital – Analyst
Yes.
operator
And we have our next question from Matt Fishbein at Jefferies.
Matt Fishbein – Jefferies – analyst
Just wanted to answer Ben's question about the work availability environment. We have heard on many calls that the similar feeling, the tightness there, may be a bigger problem in the future than in the recent past. However, we would like to point out that this will likely look different from industry to industry and the drivers behind it may be a problem slightly different from industry to industry. So I know that suggestion you pointed out is certainly a driver. From Core-Mark's point of view, wanted to know what the other big drivers of the lack of availability that are specific to the company are? And is it also a boost from industry competitors? Is it more likely to be driven by large companies outside of the industry that may step in and compete for the same skills? Or is it just the dynamics of macro-aging of the workforce that may have been affecting the situation more recently, due to the pandemic shock to the system, so to speak? These are some of my ideas, but I am keen to hear your perspective.
Scott E. McPherson – President, Chief Executive Officer
Yes. I think you made some really good key points, Matt. The only thing I pay attention to is the availability of warehouses across the country. And there are some indices that show the available storage space. And I can tell you now that inventory usage has been highest in a couple of decades, which means – and I think a lot of that math comes from the breaks in the supply chain, and people are trying to buy a space to store products and do Moving products. And when that happens, it increases the demand for warehouse workers. And I would say that the demand for drivers is also high, but I would say that at the moment the warehouse may be slightly limiting the availability of drivers. And I think a lot of that is just because the storage space is so busy and occupied. So that's for sure – other players who are in the room -. I mean, apparently Amazon has rented half of the country's warehouse space in the past 12 months. So we definitely have other competitors for the workforce. And the other thing I would say is that it's a little more regional for us. We probably have five departments that make up 80% of our challenges. And so there are certain markets in which we will certainly use more resources to recruit people.
Matt Fishbein – Jefferies – analyst
And to investigate it, you seem to be in the process of relocating one of your distribution facilities and if you just look at the type of investment allocation there it seems like moving into an existing building. So you've touched the warehouse environment a little. As a company, do you see opportunities to optimize or expand your logistical footprint in the future? Or is this more of a headwind for others who want to step on the gas to expand in the future? If you just ask this, don't you feel that renegotiating a lease inevitably means that your interest rates are variable?
Scott E. McPherson – President, Chief Executive Officer
Yes I would say a couple of things. I mean, from a growth and expansion standpoint, we are obviously focused on acquisitions and we think this is the most efficient and profitable way for us to grow. We moved the building in Oregon last year. We have another one we're evaluating for this year, and that's part of our capital plan. Bei beiden handelte es sich um Umzüge an Standorte, die aus Sicht der Mitarbeiter günstiger waren, und es handelte sich um Gebäude, bei denen es einfach nicht darauf ankam, welche Technologie wir in sie einbauten. Es handelte sich lediglich um Gebäude, die Sie nicht optimieren wollten. Aber ich würde immer noch sagen, dass unser Fokus auf Expansion und Wachstum wirklich durch Akquisition liegen wird.
Matt Fishbein – Jefferies – Analyst
Cool. Das ist hilfreich. Und noch eine letzte. Da es sich um unseren Ausstieg aus der Pandemie handelt, wollte ich überprüfen, wie die Drop-Raten und die Drop-Größe seit Anfang des Jahres nacheinander aussehen. Und ich denke, eine der Fluggesellschaften hat gerade darauf hingewiesen, dass Geschäftsreisen im Vergleich zum normalen Niveau um 50% zurückliegen und in bestimmten Märkten vielleicht etwas besser sind. Wie ist das eine reisebezogene Komponente Ihres Geschäftstrends?
Scott E. McPherson – Präsident, Chief Executive Officer
Offensichtlich sind die Tropfengrößen für uns wirklich von unseren Verkäufen ohne Zigaretten abhängig. Während des Quartals waren unsere Tropfengrößen im März rückläufig, als wir anfingen, Runden zu drehen und ein Umsatzwachstum bei Nicht-Zigaretten im gleichen Geschäft zu verzeichnen. Sie werden sehen, dass unsere Tropfengrößen anfangen zu steigen. Denn genau das treibt unsere Tropfengröße an. Ihr Kommentar zu den Fluggesellschaften, absolut! Wir haben einen Markt und einen sehr schnellen Volumenanstieg bei Fluggesellschaften gesehen. Und ich würde insgesamt sagen, dass unser Non-Convenience-Segment, obwohl es sich langsamer erholt hat, wenn ich auf diesen Monat zurückblicke, von Quartal zu Quartal, jeden Monat und jedes Quartal besser wird. Aber ich würde sagen, dass die Fluggesellschaften in den letzten drei oder vier Monaten mit Sicherheit überproportional gestiegen sind.
Operator
(Bedienungsanleitung) Wir haben die nächste Frage von John Lawrence von Benchmark.
John Lawrence – Benchmark – Analyst
Nur ein paar Fragen. Lassen Sie mich Sie nach diesen Operatoren fragen. Sie haben einige der neuen Initiativen, den PDI, erwähnt und – Geben Sie uns einen Sinn nach COVID. Welche Aufmerksamkeit kannst du diesen Jungs schenken? Ich meine, offensichtlich haben sie alle Herausforderungen durch COVID gemeistert. Und jetzt haben Sie einen Verkäufer, der versucht, ihnen zu helfen. Geben Sie uns ein Gefühl für die Antwort vorher und nachher. Brauchen sie Hilfe? Und vielleicht einige Beispiele für diese Technologie, wie das hilft.
Scott E. McPherson – Präsident, Chief Executive Officer
Ja John. Lassen Sie es mich in zwei Eimer zerbrechen. Ich denke, es gibt zwei Eimer, in denen wir ihnen wirklich helfen können. Eine davon ist die Produktauswahl und die Änderungen, die wir gesehen haben, als wir durch COVID die Technologie des anderen weiterentwickelt haben. Unter dem Gesichtspunkt der Produktauswahl habe ich bereits Blue Yonder und unsere erwähnt – wir haben vier engagierte Mitarbeiter, die bei Blue Yonder lediglich Schaltpläne entwickeln und Schaltpläne erstellen. Und wir arbeiten regelmäßig mit all unseren Anbietern zusammen, um diese Schaltpläne zu optimieren. Und ich würde sagen, dass es in diesem Jahr bedeutende Veränderungen gab. Wir haben in diesem Jahr viele Änderungen im Produktmix gesehen. Wir arbeiten sehr hart und viele Leute besuchen unser Kompetenzzentrum, nachdem wir das wieder geöffnet haben. Wir hatten in diesem Monat fünf Leute, fünf verschiedene Gruppen, aber wir haben wirklich daran gearbeitet, ihren Produktmix im Laden zu optimieren. Die andere Sache, die COVID aus Sicht des Einzelhandels meiner Meinung nach getan hat, ist, dass der Eintrittspreis jetzt darin besteht, dass Sie sich auf einem Weg befinden müssen, auf dem Sie das Kundenerlebnis in einem Supermarkt reibungsloser gestalten können.
Und ob dies bedeutet, dass sie auf ihrem Telefon auschecken können, ob dies bedeutet, dass sie eine automatische Kaufabwicklung haben, ob dies bedeutet, dass sie ein Loyalitätsspiel haben, ob sie bei der Pumpe bestellen können, müssen Sie mit dem Hinzufügen von Technologieelementen beginnen . Und unsere Partnerschaft mit Skip und PDI kann das im Wesentlichen. All diese Dinge habe ich gerade für einen unabhängigen Einzelhändler gesprochen, aber auch für eine kleine bis mittlere Kette. Und wir haben erwähnt, dass wir unsere erste PDI-Kunden-200-Filialkette unter Vertrag genommen haben. Daher denke ich, dass es für die Zukunft von uns selbst und für unsere Bequemlichkeit von entscheidender Bedeutung sein wird, sie in den Technologiebereich zu bringen, damit sie ihre Kunden effizienter bedienen können.
John Lawrence – Benchmark – Analyst
Large. Das ist wirklich hilfreich. Zweitens, können Sie ein wenig darüber sprechen, offensichtlich über diese Ketten und einige dieser unabhängigen Unternehmen? Durch COVID stehen Sie jetzt vor Problemen in der Lieferkette und vor Arbeitsproblemen. As you talk to some of these guys and continue discussions with M&A, do you see a little — I'd say light at the end of the tunnel that they may be a little bit more ready to make a move then than before all of this?
Scott E. McPherson — President, Chief Executive Officer
Yes, I mean, I've sit on prior calls, John. I think most of the wholesale environment for convenience fared reasonably well through COVID. I know there were a number of them that took (Indecipherable) loans to be able to pay their folks and get through the most challenging times. But the one thing I would say, and I've seen it in my conversations is, events like this, make people kind of evaluate their business prospects. And I think when you have multi-generational wholesaler and that's what most of them are out there. I mean this is an event that makes you think how long do we want to do this? And so there are a number of those conversations that I've had. And I think this is an event that will probably be a catalyst that accelerate some of those conversations over the coming months and year.
Operator
And we have no further questions at this time. I'm going to turn it over to David for final remarks.
Lawrence David Jackson — Vice President-Treasury And Investor Relations.
Thank you all for joining us this morning. We appreciate your interest in Core-Mark. If you have any follow-up questions, please feel free to reach out to me through our IR contact on our website. Many Thanks.
Operator
(Operator Closing Remarks)
Duration: 36 minutes
Call participants:
Lawrence David Jackson — Vice President-Treasury And Investor Relations.
Scott E. McPherson — President, Chief Executive Officer
Christopher M. Miller — Senior Vice President And Chief Financial Officer
Ben Bienvenu — Stephens — Analyst
Kelly Bania — BMO Capital — Analyst
Matt Fishbein — Jefferies — Analyst
John Lawrence — Benchmark — Analyst
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