DIT AMCON Distributing Co

AMCON Distributing Company (“AMCON”) (NYSE MKT:DIT), an Omaha, Nebraska based consumer products company is pleased to announce fully diluted earnings per share of $8.59 on net income available to common shareholders of $6.2 million for the fiscal year ended September 30, 2015. AMCON earned $2.73 per fully diluted share on net income available to common shareholders of $2.0 million for the fourth fiscal quarter ended September 30, 2015.

“We are pleased with our results for fiscal 2015. AMCON’s leadership position in the convenience distribution industry is a function of our relentless focus on customer service and reliability,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. He further noted, “We believe our focused strategic plan and customer centric philosophy has enabled AMCON to navigate this challenging business environment. Our objective is to deliver attractive risk adjusted rates of return on the capital we employ. To support this objective we continue to invest in foodservice and information technology both of which drive the profitability of our customers.”

The wholesale distribution segment reported revenues of $1.3 billion and operating income before depreciation and amortization of $18.3 million for fiscal 2015, and revenues and operating income before depreciation and amortization of $336.9 million and $5.3 million, respectively, for the fourth fiscal quarter of fiscal 2015. The retail health food segment reported revenues of $31.3 million and operating income before depreciation and amortization of $1.1 million for fiscal 2015, and revenue of $7.6 million and operating income before depreciation and amortization of $0.2 million for the fourth fiscal quarter of 2015.

“Our emphasis on building long term relationships continues to provide us with a significant competitive advantage,” said Kathleen Evans, President of AMCON’s Wholesale Distribution Segment. Evans continued, “This is clearly evident based on our positive fall trade show response which will provide considerable momentum as we enter fiscal 2016. We are actively working with our customers to expand our service territory as they grow.”

“The Retail Health Food industry continues to grow. However, with this growth there has been substantial competition enter our markets which has pressured revenues,” said Eric Hinkefent, President of AMCON’s Retail Health Food segment. “We have taken an aggressive approach to rationalize our operating expenses in light of the competitive environment and are looking at alternative ways to maintain our margins,” added Hinkefent.

“We are very focused on increasing our shareholders’ equity per share, maintaining high levels of balance sheet liquidity and generating free cash flow. At September 30, 2015, our shareholders’ equity was $61.4 million, resulting in adjusted book value per share of $88.23. We turned our inventory twenty-three times and consolidated debt was $24.6 million. At its lowest point during fiscal 2015 our consolidated debt was $12.6 million,” said Andrew Plummer, AMCON’s Chief Financial Officer. “We continue to place a high priority on the development of information technology for internal and external purposes. These are important investments in the future of our business. In addition, we are exploring additional upgrades and enhancements to our facilities system wide,” added Plummer.

AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, foodservice, frozen and chilled foods, and health and beauty care products with locations in Illinois, Missouri, Nebraska, North Dakota, South Dakota and Tennessee. AMCON also operates sixteen (16) health and natural product retail stores in the Midwest and Florida. The retail stores operate under the names Chamberlin's Market & Cafe www.chamberlins.com and Akin’s Natural Foods Market www.akins.com

This news release contains forward-looking statements that are subject to risks and uncertainties and which reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. A number of factors could affect the future results of the Company and could cause those results to differ materially from those expressed in the Company's forward-looking statements including, without limitation, availability of sufficient cash resources to conduct its business and meet its capital expenditures needs and the other factors described under Item 1.A. of the Company’s Annual Report on Form 10-K. Moreover, past financial performance should not be considered a reliable indicator of future performance. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements.

Visit AMCON Distributing Company's web site at: www.amcon.com

  AMCON Distributing Company and Subsidiaries   CONSOLIDATED BALANCE SHEETS     September 30, 2015     2014 ASSETS Current assets: Cash $219,536 $99,922 Accounts receivable, less allowance for doubtful accounts of $0.9 million at 2015 and $0.8 million at 2014 31,866,787 33,286,932 Inventories, net 60,793,478 43,635,266 Deferred income taxes 1,553,726 1,606,168 Income taxes receivable 113,238 — Prepaid and other current assets 2,125,908   5,034,570   Total current assets 96,672,673 83,662,858  

Property and equipment, net

12,753,145 13,763,140 Goodwill 6,349,827 6,349,827 Other intangible assets, net 4,090,978 4,455,978 Other assets 317,184   448,149   $120,183,807   $108,679,952   LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $17,044,726 $16,412,895 Accrued expenses 7,224,963 6,891,308 Accrued wages, salaries and bonuses 3,282,354 2,647,969 Income taxes payable — 1,603,614 Current maturities of long-term debt 351,383   341,190   Total current liabilities 27,903,426 27,896,976  

Credit facility

20,902,207 15,081,783 Deferred income taxes 3,696,098 3,484,204 Long-term debt, less current maturities 3,384,319 3,735,702 Other long-term liabilities 34,860 139,003 Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, and a total liquidation preference of $2.5 million at both September 2015 and September 2014 2,500,000 2,500,000 Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized, 16,000 shares issued and outstanding at September 30, 2015 and September 30, 2014, and a total liquidation preference of $0.4 million at both September 2015 and September 2014 400,000 400,000  

Commitments and contingencies

 

Shareholders’ equity:

Preferred stock, $0.01 par value, 1,000,000 shares authorized, 116,000 shares outstanding and issued in Series A and B referred to above — — Common stock, $0.01 par value, 3,000,000 shares authorized, 621,104 shares issued and outstanding at September 2015 and 602,411 shares issued and outstanding at September 2014 7,061 6,677 Additional paid-in capital 15,509,199 13,571,909 Retained earnings 53,527,606 47,829,201 Treasury stock at cost (7,680,969 ) (5,965,503 ) Total shareholders’ equity 61,362,897   55,442,284   $120,183,807   $108,679,952       AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF OPERATIONS     Fiscal Years Ended September 2015     2014 Sales (including excise taxes of $390.8 million and $387.8 million, respectively) $1,281,855,896 $1,236,755,388 Cost of sales 1,205,287,311   1,160,248,793   Gross profit 76,568,585   76,506,595   Selling, general and administrative expenses 62,769,438 64,723,824 Depreciation and amortization 2,264,184   2,386,402   65,033,622   67,110,226   Operating income 11,534,963 9,396,369 Other expense (income): Interest expense 841,739 935,360 Other (income), net (69,054 ) (130,519 ) 772,685   804,841   Income from operations before income tax expense 10,762,278 8,591,528 Income tax expense 4,401,000   3,632,000   Net income 6,361,278 4,959,528 Preferred stock dividend requirements (195,105 ) (195,105 ) Net income available to common shareholders $6,166,173   $4,764,423    

Basic earnings per share available to common shareholders:

$9.96 $7.81  

Diluted earnings per share available to common shareholders:

$8.59 $6.75  

Basic weighted average shares outstanding

619,295 610,392 Diluted weighted average shares outstanding 740,233 735,227     AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF CASH FLOWS     Fiscal Years Ended September 2015     2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $6,361,278 $4,959,528 Adjustments to reconcile income from operations to net cash flows from operating activities: Depreciation 1,899,184 2,021,402 Amortization 365,000 365,000 (Gain) loss on sale of property and equipment 76,546 (59,449 ) Equity-based compensation 1,224,661 1,406,033 Net excess tax benefit on equity-based awards (320,000 ) — Deferred income taxes 264,336 382,959 Provision (recoveries) for losses on doubtful accounts 82,000 (317,000 ) Provision for losses on inventory obsolescence 69,324 44,695 Other (8,045 ) (8,045 ) Changes in assets and liabilities: Accounts receivable 1,338,145 (4,586,727 ) Inventories (17,227,536 ) 3,403,156 Prepaid and other current assets 2,908,662 (32,578 ) Other assets 130,965 49,733 Accounts payable 643,487 591,478 Accrued expenses and accrued wages, salaries and bonuses 1,028,560 (238,994 ) Income taxes payable (1,396,852 ) (318,737 ) Net cash flows from operating activities (2,560,285 ) 7,662,454   CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (1,018,391 ) (2,796,326 ) Proceeds from sales of property and equipment 41,000 192,373 Acquisitions —   (996,803 ) Net cash flows from investing activities (977,391 ) (3,600,756 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on bank credit agreements 5,820,424 240,071 Principal payments on long-term debt (341,190 ) (998,788 ) Proceeds from the exercise of stock options 450,000 — Repurchase of common stock (1,715,466 ) (2,664,547 ) Net excess tax benefit on equity-based awards 320,000 — Dividends paid on convertible preferred stock (195,105 ) (195,105 ) Dividends on common stock (467,768 ) (468,034 ) Withholdings on the exercise of equity-based awards (213,605 ) (150,409 ) Net cash flow from financing activities 3,657,290   (4,236,812 ) Net change in cash 119,614 (175,114 ) Cash, beginning of year 99,922   275,036   Cash, end of year $219,536   $99,922     Supplemental disclosure of cash flow information: Cash paid during the year for interest $828,005 $946,881 Cash paid during the year for income taxes 5,533,516 3,567,778  

Supplemental disclosure of non-cash information:

Equipment acquisitions classified as accounts payable $23,329 $34,985 Issuance of common stock in connection with the vesting and exercise of equity-based awards 1,240,842 1,154,869    

AMCON Distributing Company and Subsidiaries

               

FISCAL YEAR 2015

  (dollars in thousands, except per share data) First Second Third Fourth   Sales $ 315,433 $ 287,444 $ 334,457 $ 344,522  

Gross profit

  19,527     17,733     19,499     19,810    

Income from operations before income tax expense

  2,539     1,498     3,329     3,396    

Net income

1,546 769 1,996 2,050  

Preferred stock dividend requirements

  (49 )   (48 )   (49 )   (49 )  

Net income available to common shareholders

$ 1,497   $ 721   $ 1,947   $ 2,001      

Basic earnings per share available to common shareholders

$ 2.44   $ 1.17   $ 3.16   $ 3.16    

Diluted earnings per share available to common shareholders

$ 2.11   $ 1.04   $ 2.69   $ 2.73        

FISCAL YEAR 2014

  (dollars in thousands, except per share data) First Second Third Fourth   Sales $ 305,626 $ 272,422 $ 322,648 $ 336,060  

Gross profit

  19,641     17,620     19,295     19,951    

Income from operations before income tax expense

  2,253     995     2,250     3,093    

Net income

1,288 531 1,260 1,880  

Preferred stock dividend requirements

  (49 )   (48 )   (49 )   (49 )  

Net income available to common shareholders

$ 1,239   $ 483   $ 1,211   $ 1,831      

Basic earnings per share available to common shareholders

$ 1.99   $ 0.79   $ 2.00   $ 3.04    

Diluted earnings per share available to common shareholders

$ 1.73   $ 0.72   $ 1.73   $ 2.57    

The Company’s quarterly earnings per share are based on weighted average shares outstanding for the quarter; therefore the sum of the quarters may not equal the full year earnings per share amount.

AMCON Distributing Company and Subsidiaries

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

The financial measure of adjusted book value per share included in this press release (“adjusted book value per share”) has been determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Management believes that this non-GAAP financial measurement reflects an additional way of viewing aspects of the Company’s business that, when viewed together with its financial results computed in accordance with GAAP, provides a more complete understanding of factors affecting historical financial performance of the Company. This measure is important to investors interested in determining the amount of book value per share if all potentially dilutive shares were exercised or converted. This non-GAAP financial measurement is not intended to be a substitute for the comparable GAAP measurements and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The Company has defined the non-GAAP financial measure of adjusted book value per share as follows:

• “Adjusted book value per share” is defined as total shareholders’ equity increased by the impact of proceeds from the exercise of all stock options, conversion of convertible preferred stock and vesting of restricted stock units divided by total common shares outstanding plus common shares issuable upon the exercise of all stock options, conversion of convertible preferred stock and vesting of restricted stock units.”

   

September 2015

Number of common shares outstanding at September 30, 2015 621,104 Total shareholders’ equity at September 30, 2015 $ 61,362,897   Book value per share at September 30, 2015 $ 98.80    

September 2015

Number of common shares outstanding at September 30, 2015 621,104 Add: common shares potentially issuable for stock options, convertible preferred stock, and unvested restricted stock units /1/   149,785   770,889   Total shareholders’ equity at September 30, 2015 $ 61,362,897 Equity impact if all potential common shares were converted /1/   6,651,906 $ 68,014,803   Adjusted book value per share at September 30, 2015 $ 88.23         /1/     Assumes the exercise of all vested and unvested stock options, conversion of all preferred stock, and vesting of all outstanding restricted stock units at September 30, 2015.  

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AMCON Distributing CompanyChristopher H. Atayan, 402-331-3727