AMCON Distributing Company Reports Fully Diluted Earnings Per Share Of $0.72 For The Quarter Ended March 31, 2014

AMCON Distributing Company (“AMCON”) (NYSE MKT:DIT), an Omaha, Nebraska based consumer products company is pleased to announce fully diluted earnings per share of $0.72 on net income available to common shareholders of $0.5 million for the fiscal quarter ended March 31, 2014.

“Both of our business segments operate in a highly competitive environment. We continue to focus on customer service and reliability to differentiate AMCON and position us as an industry leader. We were pleased to make a small acquisition this quarter that enhances our strength in the North Dakota market,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. He further noted, “We are actively pursuing acquisitions to enhance and expand our service territory.”

Our wholesale distribution segment reported revenues of $263.2 million and operating income before depreciation and amortization of $2.6 million for the second fiscal quarter of 2014. The retail health food segment reported revenues of $9.2 million and operating income before depreciation and amortization of $0.6 million for the same period.

“Our annual spring trade show was very well received and provides momentum as we enter our seasonally strong period. We continue to expend resources to enhance our capability in foodservice as the convenience industry is increasingly focused on the profits derived from these products and services,” said Kathleen M. Evans, President of AMCON’s Wholesale Distribution Segment.

“Our Chamberlin’s and Akin’s retail health food stores have a strong and long-standing brand dating back to 1935. As the natural health food industry has grown, so too has the interest in health food retailing from national and regional competitors. As a result, the number of retail entrants in our Midwestern markets has outpaced the natural food industry growth in those markets which impacts our sales,” said Eric J. Hinkefent, President of AMCON’s Retail Health Food Segment.

“We continue to maintain a high degree of balance sheet liquidity. At March 31, 2014 our shareholders’ equity was $53.4 million and consolidated debt was $24.2 million,” said Andrew Plummer, AMCON’s Chief Financial Officer. “The expansion of our foodservice facilities at our Rapid City, South Dakota branch continues to progress according to plan. This expansion will provide significant additional capacity to meet our customers’ growing needs in the Dakotas resulting from considerable growth as well as our recent acquisition in that market. In addition, we continue to invest in information technology for internal and external purposes,” added Mr. 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
Condensed Consolidated Balance Sheets
March 31, 2014 and September 30, 2013
 
March September
2014

2013
(Unaudited)
ASSETS
Current assets:
Cash $ 396,560 $ 275,036
Accounts receivable, less allowance for doubtful accounts of $1.2 million and $1.1 million at March 2014 and September 2013, respectively 26,894,796 28,383,205
Inventories, net 49,075,457 46,125,187
Deferred income taxes 1,502,474 1,831,933
Prepaid and other current assets   4,996,292     5,001,992  
Total current assets 82,865,579 81,617,353
 
Property and equipment, net 13,525,701 13,088,859
Goodwill 6,349,827 6,349,827
Other intangible assets, net 4,638,478 4,820,978
Other assets   484,828     497,882  
$ 107,864,413   $ 106,374,899  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 15,904,672 $ 15,859,636
Accrued expenses 5,472,356 6,714,444
Accrued wages, salaries and bonuses 1,992,439 2,754,136
Income taxes payable 303,759 1,922,351
Current maturities of long-term debt   560,647     998,788  
Total current liabilities 24,233,873 28,249,355
 
Credit facility 19,768,331 14,841,712
Deferred income taxes 3,459,998 3,327,010
Long-term debt, less current maturities 3,907,110 4,076,892
Other long-term liabilities 235,373 239,396

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 March 2014 and September 2013
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 both March 2014 and September 2013, and a total liquidation preference of $0.4 million at both March 2014 and September 2013
400,000 400,000

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, 611,432 shares outstanding at March 2014 and 623,115 shares outstanding at September 2013
6,677 6,543
Additional paid-in capital 13,580,479 12,502,135
Retained earnings 45,015,446 43,532,812
Treasury stock at cost   (5,242,874 )   (3,300,956 )
Total shareholders’ equity   53,359,728     52,740,534  
$ 107,864,413   $ 106,374,899  
 

   
AMCON Distributing Company and Subsidiaries
Condensed Consolidated Unaudited Statements of Operations
for the three and six months ended March 31, 2014 and 2013
 
For the three months For the six months
ended March ended March
2014   2013 2014   2013
Sales (including excise taxes of $85.7 million and $87.2 million, and $183.1 million and $185.2 million, respectively) $ 272,421,788 $ 274,568,151 $ 578,047,345 $ 576,786,472
Cost of sales   254,801,826     256,271,131     540,786,320     539,259,663  
Gross profit   17,619,962     18,297,020     37,261,025     37,526,809  
 

Selling, general and administrative expenses
15,812,174 15,438,195 32,304,437 31,286,667
Depreciation and amortization   628,834     599,785     1,252,874     1,193,647  
  16,441,008     16,037,980     33,557,311     32,480,314  
Operating income   1,178,954     2,259,040     3,703,714     5,046,495  
 
Other expense (income):
Interest expense 222,624 248,992 524,619 565,044
Other (income), net   (38,955 )   (114,846 )   (69,186 )   (176,195 )
  183,669     134,146     455,433     388,849  
Income from operations before income tax expense 995,285 2,124,894 3,248,281 4,657,646
Income tax expense   464,000     911,000     1,429,000     1,981,000  
Net income 531,285 1,213,894 1,819,281 2,676,646
Preferred stock dividend requirements   (48,108 )   (48,108 )   (97,285 )   (107,399 )
Net income available to common shareholders $ 483,177   $ 1,165,786   $ 1,721,996   $ 2,569,247  
 
 
Basic earnings per share available to common shareholders $ 0.79 $ 1.87 $ 2.79 $ 4.13
Diluted earnings per share available to common shareholders $ 0.72 $ 1.63 $ 2.46 $ 3.55
 
Basic weighted average shares outstanding 611,432 623,115 616,888 622,692
Diluted weighted average shares outstanding 737,461 743,195 739,223 754,881
 

   
AMCON Distributing Company and Subsidiaries
Condensed Consolidated Unaudited Statements of Cash Flows
for the six months ended March 31, 2014 and 2013
 
2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,819,281 $ 2,676,646
Adjustments to reconcile net income from operations to net cash flows from operating activities:
Depreciation 1,070,374 1,011,147
Amortization 182,500 182,500
Gain on sale of property and equipment (24,746 ) (71,131 )
Equity-based compensation 717,821 652,421
Deferred income taxes 462,447 457,525
Provision for losses on doubtful accounts 132,000 39,000
Provision for losses (recoveries) on inventory obsolescence (1,121 ) 49,179
Other (4,023 ) (4,023 )
 
Changes in assets and liabilities:
Accounts receivable 1,356,409 1,686,669
Inventories (2,474,084 ) (780,967 )
Prepaid and other current assets 5,700 152,987
Other assets 13,054 36,724
Accounts payable (34,071 ) (1,802,183 )
Accrued expenses and accrued wages, salaries and bonuses (1,565,640 ) (1,123,486 )
Income tax payable   (1,618,592 )   (2,060,080 )
Net cash flows from operating activities 37,309 1,102,928
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,362,832 ) (1,104,229 )
Proceeds from sales of property and equipment 29,969 139,540
Acquisition   (513,938 )  

 
Net cash flows from investing activities (1,846,801 ) (964,689 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on bank credit agreements 4,926,619 3,378,417
Principal payments on long-term debt (607,923 ) (587,355 )
Repurchase of Series B Convertible Preferred Stock and common stock (1,941,918 ) (2,572,085 )
Dividends paid on convertible preferred stock (97,285 ) (107,399 )
Dividends on common stock (239,362 ) (234,917 )
Proceeds from exercise of stock options 1,180
Withholdings on the exercise of equity-based awards   (109,115 )   (74,610 )
Net cash flows from financing activities  

1,931,016
    (196,769 )
 
Net change in cash 121,524 (58,530 )
 

Cash, beginning of period
  275,036     491,387  
Cash, end of period $ 396,560   $ 432,857  
 
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 523,081 $ 564,422
Cash paid during the period for income taxes 2,585,145 3,583,555
 
Supplemental disclosure of non-cash information:
Equipment acquisitions classified as accounts payable 152,311 57,412

Issuance of common stock in connection with the vesting and exercise of equity-based awards
1,154,869 1,389,258

Conversion by holder of Series B Convertible Preferred Stock to common stock
100,000
Common stock acquired with other consideration 760,871
 

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