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 $8.38 on net income available to common shareholders of $5.8 million for the fiscal year ended September 30, 2016. AMCON earned $2.32 per fully diluted share on net income available to common shareholders of $1.6 million for the fourth fiscal quarter ended September 30, 2016.

“We are pleased with our results for fiscal 2016. AMCON has earned its leadership position in the convenience distribution industry as a result of its determined and focused efforts to provide first class customer service and reliability. As the convenience store industry evolves and becomes increasingly complex, the wide variety of programs and services we offer serve to competitively differentiate AMCON,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. He further noted, “We are diligently implementing our focused strategic plan and customer centric philosophy which enables our management team to navigate the challenging business environment. Our objective is to deliver attractive risk adjusted rates of return on the capital we employ. We expect an enhanced level of capital expenditures in the coming years to support our efforts in foodservice, information technology, expansion of our territory, and the addition of retail health food stores.”

The wholesale distribution segment reported revenues of $1.3 billion and operating income before depreciation and amortization of $17.9 million for fiscal 2016, and revenues and operating income before depreciation and amortization of $336.7 million and $4.8 million, respectively, for the fourth fiscal quarter of fiscal 2016. The retail health food segment reported revenues of $27.4 million and operating income before depreciation and amortization of $0.5 million for fiscal 2016, and revenue of $6.1 million and an operating loss before depreciation and amortization of $0.3 million for the fourth quarter of fiscal 2016.

“We are actively working to expand our service territory and support our customers as they grow,” said Kathleen Evans, President of AMCON’s Wholesale Distribution Segment. Evans continued, “Our fall trade shows provided considerable momentum as we enter fiscal 2017. We take a long term approach to building our customers’ business which is mutually beneficial.”

“We opened a new flagship Chamberlin’s store in the Orlando market at the end of fiscal 2016. In addition, we have expanded our produce offerings and have made a meaningful investment in reimaging our brand and social media in this market,” said Clifford Ginn, President of AMCON’s Retail Health Food Segment. “We will continue to invest in new stores, store remodeling, and marketing as we seek to address the competitive challenges we face in the industry.”

“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, 2016, our shareholders’ equity was $65.8 million, resulting in adjusted book value per share of $96.03. We turned our inventory twenty-two times and consolidated debt was $13.9 million. At its lowest point during fiscal 2016 our consolidated debt was $8.9 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 expansion of our distribution facilities and retail stores 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 September 2016 2015 ASSETS Current assets: Cash $ 605,380 $ 219,536

Accounts receivable, less allowance for doubtful accounts of $0.7 million at 2016 and $0.9 million at 2015

30,033,104 31,866,787 Inventories, net 48,404,882 60,793,478 Deferred income taxes 1,441,919 1,553,726 Income taxes receivable 164,959 113,238 Prepaid and other current assets   8,608,049     2,125,908   Total current assets 89,258,293 96,672,673   Property and equipment, net 12,607,877 12,753,145 Goodwill 6,349,827 6,349,827 Other intangible assets, net 3,759,311 4,090,978 Other assets   288,082     317,184   $ 112,263,390   $ 120,183,807   LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 18,164,983 $ 17,044,726 Accrued expenses 6,792,884 7,224,963 Accrued wages, salaries and bonuses 3,580,996 3,282,354 Current maturities of long-term debt   362,495     351,383   Total current liabilities 28,901,358 27,903,426   Credit facility 10,537,226 20,902,207 Deferred income taxes 4,021,569 3,696,098 Long-term debt, less current maturities 3,021,824 3,384,319 Other long-term liabilities 30,815 34,860  

Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized, and 100,000 shares issued and outstanding with a total liquidation preference of $2.5 million at September 2015 and no shares outstanding at September 2016

— 2,500,000

Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized, and 16,000 shares issued and outstanding with a total liquidation preference of $0.4 million at September 2015 and no shares outstanding at September 2016

— 400,000   Commitments and contingencies   Shareholders’ equity:

Preferred stock, $.01 par value, 1,000,000 shares authorized, 116,000 shares outstanding and issued in Series A and B referred to above

— —

Common stock, $.01 par value, 3,000,000 shares authorized, 677,057 shares outstanding and issued at September 2016 and 621,104 shares outstanding and issued at September 2015

8,184 7,061 Additional paid-in capital 19,525,554 15,509,199 Retained earnings 58,693,241 53,527,606 Treasury stock at cost   (12,476,381 )   (7,680,969 ) Total shareholders’ equity   65,750,598     61,362,897   $ 112,263,390   $ 120,183,807         AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF OPERATIONS   Fiscal Years Ended September 2016 2015 Sales (including excise taxes of $386.1 million and $390.8 million, respectively) $ 1,294,625,223 $ 1,281,855,896 Cost of sales   1,219,855,401     1,205,287,311   Gross profit   74,769,822     76,568,585   Selling, general and administrative expenses 61,733,220 62,769,438 Depreciation and amortization   2,162,667     2,264,184     63,895,887     65,033,622   Operating income 10,873,935 11,534,963   Other expense (income): Interest expense 723,221 841,739 Other (income), net   (104,959 )   (69,054 )   618,262     772,685   Income from operations before income tax expense 10,255,673 10,762,278 Income tax expense   4,275,000     4,401,000   Net income 5,980,673 6,361,278 Preferred stock dividend requirements   (160,360 )   (195,105 ) Net income available to common shareholders $ 5,820,313   $ 6,166,173     Basic earnings per share available to common shareholders $ 9.37 $ 9.96 Diluted earnings per share available to common shareholders $ 8.38 $ 8.59   Basic weighted average shares outstanding 621,435 619,295 Diluted weighted average shares outstanding 713,897 740,233   Dividends declared and paid per common share $ 1.00 $ 0.72       AMCON Distributing Company and Subsidiaries   CONSOLIDATED STATEMENTS OF CASH FLOWS   Fiscal Years Ended September 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,980,673 $ 6,361,278 Adjustments to reconcile net income from operations to net cash flows from operating activities: Depreciation 1,831,000 1,899,184 Amortization 331,667 365,000 (Gain) loss on sale of property and equipment (58,926 ) 76,546 Equity-based compensation 1,403,584 1,224,661 Net excess tax benefit on equity-based awards — (320,000 ) Deferred income taxes 437,278 264,336 (Recovery) provision for losses on doubtful accounts (199,000 ) 82,000 (Recovery) provision for losses on inventory obsolescence (57,247 ) 69,324 Other (4,045 ) (8,045 ) Changes in assets and liabilities: Accounts receivable 2,032,683 1,338,145 Inventories 12,445,843 (17,227,536 ) Prepaid and other current assets (6,482,141 ) 2,908,662 Other assets 29,102 130,965 Accounts payable 976,142 643,487 Accrued expenses and accrued wages, salaries and bonuses (228,552 ) 1,028,560 Income taxes receivable   (51,721 )   (1,396,852 ) Net cash flows from operating activities   18,386,340     (2,560,285 )   CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (1,594,848 ) (1,018,391 ) Proceeds from sales of property and equipment   112,157     41,000   Net cash flows from investing activities   (1,482,691 )   (977,391 )   CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on bank credit agreements (10,364,981 ) 5,820,424 Principal payments on long-term debt (351,383 ) (341,190 ) Proceeds from exercise of stock options — 450,000 Repurchase of common stock (4,795,412 ) (1,715,466 ) Net excess tax benefit on equity-based awards — 320,000 Dividends paid on convertible preferred stock (160,360 ) (195,105 ) Dividends on common stock (654,678 ) (467,768 ) Withholdings on the exercise of equity-based awards   (190,991 )   (213,605 ) Net cash flows from financing activities   (16,517,805 )   3,657,290   Net change in cash 385,844 119,614 Cash, beginning of period   219,536     99,922   Cash, end of period $ 605,380   $ 219,536     Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 737,252 $ 828,005 Cash paid during the period for income taxes 3,889,443 5,533,516   Supplemental disclosure of non-cash information: Equipment acquisitions classified as accounts payable 167,444 23,329 Issuance of common stock in connection with the vesting and exercise of equity-based awards 1,174,981 1,240,842 Issuance of common stock in connection with the redemption of Series A & B convertible preferred stock 2,899,892 —    

AMCON Distributing Company and Subsidiaries

       

FISCAL YEAR 2016

  (dollars in thousands, except per share data) First Second Third Fourth   Sales $ 322,008 $ 296,449 $ 333,399 $ 342,769  

Gross profit

  18,962   17,540   19,164   19,104  

Income from operations before income tax expense

  2,365   2,069   3,162   2,660  

Net income

1,356 1,147 1,852 1,626  

Preferred stock dividend requirements

  (49 )   (49 )   (49 )   (14 )  

Net income available to common shareholders

$ 1,307 $ 1,098 $ 1,803 $ 1,613    

Basic earnings per share available to common shareholders

$ 2.09 $ 1.81 $ 3.03 $ 2.45  

Diluted earnings per share available to common shareholders

$ 1.85 $ 1.61 $ 2.62 $ 2.32    

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    

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 vested and outstanding. 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 and vesting of restricted stock units divided by total common shares outstanding plus common shares issuable upon the exercise of all stock options and vesting of restricted stock units.”

 

September 2016

Number of common shares outstanding at September 30, 2016 677,057 Total shareholders’ equity at September 30, 2016 $ 65,750,598   Book value per share at September 30, 2016 $ 97.11    

September 2016

Number of common shares outstanding at September 30, 2016 677,057 Add: common shares potentially issuable for stock options and unvested restricted stock units /1/   50,967   728,024   Total shareholders’ equity at September 30, 2016 $ 65,750,598

Equity impact if all potential common shares were exercised or vested /1/

  4,162,825 $ 69,913,423   Adjusted book value per share at September 30, 2016 $ 96.03

____________

/1/   Assumes the exercise of all vested and unvested stock options and vesting of all outstanding restricted stock units at September 30, 2016.

 

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