Welcome to the first quarter investor call. My name is Adrianne and I'll be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I'll now turn the call over to Ms. Milton Draper. Ms. Milton Draper, you may begin.

Thank you, operator, and welcome, everyone. I would now like to read the statements about the use of forward-looking statements and non-GAAP financial measures during this call. Statements made in the course of this call that state the company's and management's hopes, beliefs, expectations, or predictions of the future are forward-looking statements. Actual results may differ materially from those projections. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our SEC filings, including our 10-Ks, our 10-Qs and our press releases. We undertake no obligation to update these forward-looking statements. We are holding this call to review our first quarter results and to answer any questions you might have. If you have additional questions after this call, you may call me at (650)589-9445. Joining me today is the Chief Executive Officer of Core-Mark, Thomas Perkins; and our Chief Financial Officer, Stacy Loretz-Congdon. Also in the room is Chris Miller, our Chief Accounting Officer; and Greg Antholzner, our Vice President of Finance and Treasurer. Our line-up for the call today is as follows: Tom Perkins will discuss the state of the business, our strategies and opportunities ahead, followed by Stacy Loretz, who will go into some details about the financials. We will then open the call for your questions. Now I would like to turn the call over to our CEO, Tom Perkins.

Good morning, everyone. I'm sure that most of you have seen this morning's announcement of our new distribution agreement with Turkey Hill. This is a great win for us, and we are very excited to expand our partnership with Kroger. Turkey Hill is the largest of the Kroger convenience brands with 268 stores in Pennsylvania, Ohio and Indiana, which we started shipping this week. This is an important market share gain for us, and it's critical to our sales growth goals for the year. With the addition of the Davenport sales, our market share gains are looking pretty good for the year. The addition of the Davenport acquisition is going quite well, and I anticipate the rollout of Turkey Hill to go well, too. As I indicated in the last call, retail sales were soft in the early part of the year due, we believe, to the increase in payroll taxes and the sharp increase in fuel prices. This hit cigarette consumption particularly hard. In addition, as many of the retailers in the industry have indicated subsequent to our last call, we all face tough comps in-store because of the mild winter in 2012. That being said, we continue to believe that normal purchasing patterns will return as we head into the high season where comps ease. To give you more insight into the industry, I would like to discuss the recently released 2012 data from the National Association of Convenience Stores or NACS. This data indicated that C-Store count continues to rise, growing to almost 150,000 store locations. This number of retail locations equates to an impressive 36% of all retail locations in the U.S. It looks like the C-Store is here to stay. Single-store operators continue to dominate the industry, representing 63% of all those locations. Inside sales…

Thanks, Tom, and good morning to everyone. As a reminder to those that are new to the story, our first quarter contributes the least amount of profit to the year. Historically, the first quarter generates approximately 20% of our net sales and 10% to 15% of EBITDA for the year. For that reason, we don't get too excited by first quarter results either way. That being said, a little more sales momentum would've helped the quarter, but we are not deterred, and we always know there's more work to be done. Diluted EPS for the first quarter was $0.22 compared to $0.31 last year or for those of you who model EPS, excluding LIFO expense, $0.37 for the quarter compared to $0.46 last year, a $0.09 a decline. Foreign exchange and lower inventory holding gains both in cigarettes and food/non-food explain the majority of this difference. In addition, higher sales during the quarter would've helped lift total earnings and better leveraged our operating expenses. All that being said, for 2013 we are reiterating our guidance in all respects. We still are expecting diluted EPS between the $3.10 and $3.25 in 2013, which includes an estimate of $60 million for LIFO expense, a 40% tax rate and 11.8 million diluted shares outstanding. Excluding LIFO expense, our 2013 EPS guidance translates to a range of $3.90 to $4.05 per diluted share, a 10% to 14% increase over 2012 results. Our LIFO expense assumes some inflation in 2013. It hasn't occurred yet, but we still believe all manufacturers will need to adjust pricing in 2013. The proposed federal excise tax, or FET, on cigarettes would also impact our product cost when and if this part of the President's budget passes. Similar to prior FET increases, if passed, we would expect the corresponding manufacturer…

[Operator Instructions] And we have Andrew Wolf from BB&T Capital Markets. Andrew P. Wolf - BB&T Capital Markets, Research Division: When you set the guidance last quarter, was this -- were you contemplating winning Turkey Hill or something similar to that? Or is this sort of helping to make up for a light first quarter?

No, no. I think when we do our guidance, we anticipate market share gains. And I think it just so happened that Turkey Hill was one of those market share gains that came our way. Andrew P. Wolf - BB&T Capital Markets, Research Division: Okay, that's good to know. And I think you said you had 6 contracts you are bidding on since last quarter for around $570 plus million. Now that number's down to $400 million. Is that because some have been decided against you and some like this one have been decided for you or?

Yes, little bit of both and some are going to be coming in towards the latter part of the year that we won. So, yes. And that number will ebb and flow based on new opportunities. So ones will fall off that we win or we don't win, and then new ones will be added to the list. Andrew P. Wolf - BB&T Capital Markets, Research Division: Okay. And then you spoke a couple of times about some customer losses. Is the run rate -- I mean, was there -- is it a little higher than normal? Is there a negative swing on customer losses that you're calling out? And would it be more on the chain side or on independents?

They are midsize chains, and a lot of them are located in Canada, primarily cigarette accounts. And we had, in Calgary, and we talked in the past about some of the issues we faced in Calgary. We really had to make some decisions on some of the customers we are doing business with, and to make that division in our Canadian region more profitable. So really, it was a conscious decision to lose some of those accounts. Primarily, cigarette driven and I think that's why some of our cartons are much lower in the first quarter of 2013 versus 2012. Andrew P. Wolf - BB&T Capital Markets, Research Division: Okay, yes. Because I saw that in your queue, sort of my last question here. So is that why the Canadian sales are down like they are?

Yes, it is, Andrew. And I think what we're doing now, we're in the process of adding new accounts that are more profitable and are really aligned with our strategies, which is growing our food/non-food categories. And I think we'll, as the year progresses, I think we'll see great success in the Canadian region from that. Andrew P. Wolf - BB&T Capital Markets, Research Division: Just the last follow-up on that. So the net income -- sorry, the pretax income in Canada had a negative swing of, I think, $500,000. But so did the foreign currency transaction. Is that empty at the pretax or did the actual core business delever?

It was primarily due to the cigarette consumption decline that drove that, and we should start to see us lapping some of that in the second quarter and then again in the fourth quarter as we move through the year. But again, as Tom indicated, we are seeing improved food/non-food sales margins that increased as a result of kind of shifting off this heavy index of Cigarette business in Canada. Andrew P. Wolf - BB&T Capital Markets, Research Division: And if I can just ask one more. Just on the other tobacco, is that where e-cigarettes would be recorded? And are you distributing e-cigarettes? And is that as hot a category as you sort of hear or read about?

Yes. We have -- e-cigarettes is in our general merchandise because it's not a taxed product today, and we sell quite a few different brands of e-cigarettes, and we definitely are experiencing the same growth that the e-cigarette companies are expressing in different trade journals and periodicals.

And we have John Lawrence from Stephens online with a question.

Yes, Tom, would you take a little deeper dive into -- you talked about Florida, you're seeing some of the improvement down there on some of the initiatives. When did that -- was there any -- I guess second quarter of '12, is that when one of the first areas you targeted was sort of the new revamped model, or can you sort of walk us through that a little bit?

Yes, if you think of the -- go back to the timeline of Florida, as we opened that new distribution center in the third quarter of 2011, and, sure, really the whole focus of that division was to ensure we had a seamless transition for the -- an integration of the Circle K business in Florida. And so that really took about 3 to 6 months just to make sure everything was going well, which it was, with the traditional business. And then as we got into the second quarter, we started to add other categories along the Fresh and dairy and bread, etc. categories. And also, we were able then to start focusing on picking up independent accounts in Florida out of that building, and we started to see -- and we're starting to see our strategies and our programs be implemented in those independents. So I anticipate that growth just to continue out of that region.

Secondly, on Turkey Hill, can you give us a little bit of a backdrop? What were they doing before? How did this come about? And sort of, sort of the needs they have?

They were serviced Eby-Brown, which is one of our competitors. And they, in turn -- my understanding is they, for whatever reasons they had, they shut down their distribution center in Maryland that was servicing Turkey Hill, and so Turkey Hill needed a new supplier. And we were the perfect choice for them.

Great. Any release of how large this is or anything like that?

No, I can't release that. Normally, from a press release perspective, when we do announce it publicly, it's usually greater than $200 million, but that's all I can say.

And we have Peter Black from Wynnefield Capital online with a question.

Just one question to clarify what Stacy said. Did you say that you expected free cash flow for the year to be about $65 million?

$55 million to $60 million, that's correct, absent any acquisitions at the end of the year or unusual events at the end of the year that might temporarily take that number down. I usually call that out in the fourth quarter call.

Okay, so basically then -- I mean you've already generated almost that amount just in the first quarter. So we should assume that your -- the inventory number, you'll have a, at some point, a big reversal on that number, and you could see -- is it possible that you could see a quarter where you have negative free cash flow?

If you look at the quarter on a stand-alone basis, yes. I usually report on year-to-date, but first quarter is always strong because we're fleshing through the LIFO inventory or bringing inventories down to normal levels as we start to build inventories for the summer months or for any inventory speculation. You'll see the free cash flow get absorbed. And as we move towards the end of summer, you'll see ebb and flow. So I usually advise not to look at it on a quarter-by-quarter basis, I kind of forecast for the full year.

And we have Chris McGinnis from Sidoti & Company online with a question. Christopher McGinnis - Sidoti & Company, LLC: I guess just 2 things. One on the Turkey Hill announcement. Does this open up the opportunity to bid on the rest of Kroger's business as well as on the convenience side?

Well, we do -- well, of the convenience store divisions today now with Turkey Hill, we do 668 stores. And I think in total, they have about, I want to say, a little over 800 total stores. So we have a lion's share of their business today. Christopher McGinnis - Sidoti & Company, LLC: Got you. And then just on the expansion to the Southeast, you've had some time there, and I understand that there's a new improvement in the way you're delivering your value-added services. But has that region, I guess on an organic basis, outperformed the other regions just because it's a newer platform to deliver your value-added kind of products?

You know, we are. And I'll point to Forrest City groceries that we bought in Forrest City, Arkansas. And we really see a foothold being gained, especially with our Fresh offering, dairy and bread, and in our marketing programs that they did not have in the past. And they really did a really good job last year, but we're just seeing that momentum continue to build in that marketplace. And again, we're bringing programs to that marketplace that they did not have before. And so it definitely gives us a competitive advantage in that market. And I think the same thing we're seeing in Florida now that we have a distribution center in Florida, same type of deal. And once we're seeing our marketing programs get implemented in Davenport, and once we get that conversion finished in the third, fourth quarter of this year, we'll see that momentum gaining steam also. Christopher McGinnis - Sidoti & Company, LLC: And I guess -- I know I believe Mike has talked about it before, but what is the, in 1Q, the -- not to say that -- it always gets off to a slow start. Is it just because of the seasonality? But you would figure that you would outperform a little bit more just because of the service offerings that you have and the likely share gain that you would get from that.

In one of the comments at the CEO summit I was at last week, and there were both suppliers and retailers there, and the suppliers in particular, the beverage guys, really spoke of their real soft volumes in the first quarter of 2013 versus 2012. And I think really it's because of the real mild winter we had in particular areas in the Northeast and in the Midwest. And so the comps -- last year, I remember Mike saying the comps -- first quarter last year was, I mean, was incredible growth rate. But again, we caution people that that was unusual, and I think that this is more of a normal first quarter for us because of the cold weather. And unfortunately, cold weather does -- I don't like to use the weather term too much, but it does impact traffic at the convenience stores. Christopher McGinnis - Sidoti & Company, LLC: Sure, no, I understand. And then I guess just lastly, the Turkey Hill already have most of these, I guess, offerings in terms of the fresh food. And is VCI maybe new to them? Did they take all of the...

There definitely will be opportunities. They are definitely one of the better-run convenience store chains, and they have to be because they compete against some really well-established chains like Sheetz and WaWa. And they're on par with those guys. So they have been doing a lot of the things that we impress upon our own retailers and we brought to our own retailers today. But there will be opportunities for us.

And we have Mike Haney from Benchmarks Partners online with a question.

Just a question. Absent a revenue increase number for Turkey Hill, is the mix within Turkey Hill consistent with kind of that 70, 30 mix that you guys presently have right now, cigarettes and food?

Maybe a little bit higher skewed towards cigarettes only because of the tax rates, the excise taxes for that region. But pretty much, it's along those lines, but maybe a little bit 72, 28 or something like that, but it's really because of the excise tax rates in that region.

Okay. And did I hear you correct, Stacy, that you said it would compress margins initially?

Yes. Again, any larger account that we normally have, they have a little bit more pricing leverage, but they do pace after and the inventories turn much faster, so our return on net invested assets is usually very healthy. But we do expect compression in our margins both in the cigarettes and the non-cigarette category.

And I can assume that the revenues that you will start clocking those beginning the 1st of May or something like that, that you will be up both feet on that?

Yes, we actually started the rollout of the stores this week. Actually Monday we made our first delivery. And we'll rollout all the stores in the next 2.5 weeks, and they'll be full-blown by the -- before the end of May.

And we have John Koller from Oppenheimer online with a question. John Jay Koller - Oppenheimer & Close, Inc.: It's Oppenheimer & Close. My question just relates to capital expenditures. I guess the $30 million figures expected for this year, that includes about, I think, $15 million in maintenance. I think in earlier calls, there was another $8 million that was called out for the compressed natural gas. Is that still on target for this year? And then if you could just give some idea what the remainder would be spent on, that would be great.

Yes, that's still on target for this year. Again, we talked a little bit about the tractor availability. And we're sort of -- it seems like the industry and especially from large vehicles perspective like we have are sort of getting ahead of what the manufacturers are able to produce. And so we're definitely monitoring that closely. The rest is going to be for expansion, either in additional freezer or cooler space, additional trailers for increases in our business and our volume in market share wins, and also some investments we'll be making in our Davenport acquisition also.

And we have Nelson Obus from Wynnefield online with a question.

Yes, Atri [ph] been giving some indications, some of the other cigarette companies, that they are looking to increase cigarette prices, 3% or 4% the rest of this year. Is that factored into any of your projections?

We normally do -- we normally plan a modest price increase on cigarettes, and that's in our guidance. If it's more, that's great for us. And I think everything I'm seeing and then reading is that, that will continue this year as the 3% to 4% increase in prices.

And we have Andrew Wolf from BB&T Markets online with a question. Andrew P. Wolf - BB&T Capital Markets, Research Division: Just wanted to ask if maybe you could comment on the kind of cadence of the sales during the quarter and after the quarter? In other industries, let's say, like restaurants, which have some at least food, a little bit of overlap with C-Stores and Foodservice, they saw things get better through March and April and as things warmed up a little bit and I guess people adjusted to a little less disposable income.

Yes, Andrew, definitely our -- the weakest month we had was January and February, and I think that was when the taxes hit -- increase hit in January and the fuel spike in February. And as we got into March, we did see volumes increase, in particular in cigarettes. And then as we're seeing in April today, we are seeing it getting back to normal patterns, where cigarette is coming to where they should be. So we definitely are seeing our sales grow stronger as the weather heats up and the prices on gas stay at a lower level than it was in February.

[Operator Instructions] We have no further questions at this time.

Well, thank you for your participation in our conference call and for your interest in Core-Mark. The first quarter was marked with some encouraging results, particularly in the health of the non-cigarette business. With the addition of significant new market shares coming on board, we remain quite positive for the year and for the high season in particular. If you have follow-up questions, please give me a call at (650)589-9445. Thank you, and thank you, operator.

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