AMCON Distributing Company Reports Fully Diluted Earnings Per Share of $5.38 for the Fiscal Year Ended September 30, 2018

Business Wire 8-Nov-2018 4:05 PM

AMCON Distributing Company ("AMCON") (NYSE:DIT), an Omaha, Nebraska based consumer products company is pleased to announce fully diluted earnings per share of $5.38 on net income available to common shareholders of $3.6 million for the fiscal year ended September 30, 2018. AMCON earned $1.60 per fully diluted share on net income available to common shareholders of $1.0 million for the fourth fiscal quarter ended September 30, 2018.

"We are pleased with our results for fiscal 2018. First class service and reliability continue to be the hallmark of our position as a leader in the convenience distribution industry," said Christopher H. Atayan AMCON's Chairman and Chief Executive Officer. He further noted, "Business conditions continue to be challenging for the convenience distribution industry. As a means of addressing this circumstance, we are placing increased emphasis on the development of foodservice programs that are competitive with quick service restaurants. Our management philosophy is to offer our customers a wide array of foodservice programs that offer menu options that work best with their staffing and facility requirements. Our long term commitment to foodservice excellence means that we will continue to invest in the appropriate facilities and equipment necessary to be a top level supplier in these markets. We continue to expect an enhanced level of capital expenditures in the coming years to support our efforts in foodservice, information technology, expansion of our territory, and continued redevelopment of our retail health food stores. Finally, we are continually evaluating strategic acquisition opportunities."

The wholesale distribution segment reported revenues of $1.3 billion and operating income of $15.0 million for fiscal 2018, and revenues and operating income of $352.3 million and $5.0 million, respectively, for the fourth fiscal quarter of fiscal 2018. The retail health food segment reported revenues of $29.6 million and an operating loss of $3.1 million for fiscal 2018, and revenue of $10.2 million and an operating loss of $1.4 million for the fourth quarter of fiscal 2018.

"We are actively supporting our customers as they expand organically and from acquisitions," said Andrew C. Plummer, AMCON's President and Chief Operating Officer. He furthered noted, "Late in the fiscal year we acquired an additional warehouse immediately adjacent to our existing facility in Bismarck, North Dakota. This expansion will enable us to serve the growing needs of our customers in our northern region. Our fall trade show season was well received by our customer base and supported enthusiastically by our vendor community. Also, during the fourth quarter we were able to acquire eight (8) Earth Origins Market health food retail stores in the Florida market and we are now operating as the Healthy Edge Retail Group with three brands Akins, Chamberlin's and Earth Origins Market. In addition, we were able to successfully complete the relocation of our existing store in South Lakeland."

Mr. Plummer further added, "At September 30, 2018, our shareholders' equity was $64.6 million, resulting in adjusted book value per share of $102.85. We turned our inventory 19 times and consolidated debt was $40.2 million. At its lowest point during fiscal 2018 our consolidated debt was $6.4 million. We will continue our commitment to investing in technology that supports our customers' growth and our internal needs, as well as actively evaluating wholesale facility expansions and continued investment in our retail store remodels."

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 twenty-two (22) health and natural product retail stores in the Midwest and Florida through our subsidiary The Healthy Edge, Inc. The retail stores operate under the names Chamberlin's Natural Foods www.chamberlins.com, Akin's Natural Foods www.akins.com, and Earth Origins Market www.earthoriginsmarket.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
2018 2017
ASSETS
Current assets:
Cash $ 520,644 $ 523,065
Accounts receivable, less allowance for doubtful accounts of $0.9 million at September 2018 and $0.8 million at September 2017 31,428,845 30,690,403
Inventories, net 78,869,615 72,909,996
Income taxes receivable 272,112
Prepaid and other current assets   4,940,775     4,218,811  
Total current assets 116,031,991 108,342,275
 
Property and equipment, net 15,768,484 13,307,986
Goodwill 4,436,950 6,349,827
Other intangible assets, net 3,414,936 3,494,311
Other assets   301,793     310,488  
Total assets $ 139,954,154   $ 131,804,887  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,826,834 $ 17,631,552
Accrued expenses 8,556,620 7,553,089
Accrued wages, salaries and bonuses 3,965,733 3,477,966
Income taxes payable 544,069
Current maturities of long-term debt   1,096,306     373,645  
Total current liabilities 34,445,493 29,580,321
 
Credit facility 35,428,597 29,037,182
Deferred income tax liability, net 1,782,801 2,336,263
Long-term debt, less current maturities 3,658,391 2,648,179
Other long-term liabilities 38,055 34,100
 
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized
Common stock, $.01 par value, 3,000,000 shares authorized, 615,777 shares outstanding at September 2018 and 678,006 shares outstanding at September 2017 8,441 8,314
Additional paid-in capital 22,069,098 20,825,919
Retained earnings 63,848,030 60,935,911
Treasury stock at cost   (21,324,752 )   (13,601,302 )
Total shareholders' equity   64,600,817     68,168,842  
Total liabilities and shareholders' equity $ 139,954,154   $ 131,804,887  
 

 
AMCON Distributing Company and Subsidiaries
 
CONSOLIDATED STATEMENTS OF OPERATIONS
       
Fiscal Years Ended September
2018 2017
Sales (including excise taxes of $368.4 million and $368.8 million, respectively) $ 1,322,306,658 $ 1,274,984,408
Cost of sales   1,245,375,460     1,202,536,285  
Gross profit   76,931,198     72,448,123  
Selling, general and administrative expenses 66,781,234 64,173,895
Depreciation and amortization 2,318,146 2,049,475
Impairment charges   1,912,877      
  71,012,257     66,223,370  
Operating income   5,918,941     6,224,753  
 
Other expense (income):
Interest expense 1,194,373 825,690
Other (income), net   (54,042 )   (39,513 )
  1,140,331     786,177  
Income from operations before income tax expense 4,778,610 5,438,576
Income tax expense   1,164,000     2,489,000  
Net income available to common shareholders $ 3,614,610   $ 2,949,576  
 
Basic earnings per share available to common shareholders $ 5.47 $ 4.34
Diluted earnings per share available to common shareholders $ 5.38 $ 4.26
 
Basic weighted average shares outstanding 660,925 679,478
Diluted weighted average shares outstanding 672,449 692,183
 
Dividends declared and paid per common share $ 1.00 $ 1.00
 

 
AMCON Distributing Company and Subsidiaries
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
       
Fiscal Years Ended September
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,614,610 $ 2,949,576
Adjustments to reconcile net income from operations to net cash flows from

operating activities:

Depreciation 2,238,771 1,784,475
Amortization 79,375 265,000
Impairment charges 1,912,877
Gain on sale of property and equipment (4,070 ) (31,622 )
Equity-based compensation 1,271,840 1,394,879
Deferred income taxes (553,462 ) (243,387 )
Provision for losses on doubtful accounts 90,000 98,000
Inventory allowance (291,917 ) (101,716 )
Other 3,955 3,285
 
Changes in assets and liabilities:
Accounts receivable (828,442 ) (755,299 )
Inventories (5,056,917 ) (24,403,398 )
Prepaid and other current assets (633,032 ) 4,389,238
Other assets 8,695 (22,406 )
Accounts payable 3,295,390 (467,348 )
Accrued expenses and accrued wages, salaries and bonuses 1,563,964 669,873
Income taxes payable and receivable   (816,181 )   709,028  
Net cash flows from (used in) operating activities   5,895,456     (13,761,822 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,226,107 ) (2,565,699 )
Proceeds from sales of property and equipment   5,800     46,654  
Net cash flows from (used in) investing activities   (3,220,307 )   (2,519,045 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility 1,424,929,646 1,311,967,154
Repayments under revolving credit facility (1,418,538,231 ) (1,293,467,198 )
Principal payments on long-term debt (541,844 ) (362,495 )
Repurchase of common stock (7,723,450 ) (1,124,921 )
Dividends on common stock (702,491 ) (706,906 )
Withholdings on the exercise of equity-based awards   (101,200 )   (107,082 )
Net cash flows from (used in) financing activities   (2,677,570 )   16,198,552  
Net change in cash (2,421 ) (82,315 )
Cash, beginning of period   523,065     605,380  
Cash, end of period $ 520,644   $ 523,065  
 
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,137,691 $ 819,969
Cash paid during the period for income taxes 2,533,643 2,023,359
 
Supplemental disclosure of non-cash information:
Equipment acquisitions classified in accounts payable $ 1,253 $ 101,361
Purchase of property financed with debt 1,575,000
Acquisition of assets financed with debt 699,717

Issuance of common stock in connection with the vesting and exercise of equity-based awards

1,183,091 1,262,763
 

 

AMCON Distributing Company and Subsidiaries

               

FISCAL YEAR 2018

 
(dollars in thousands, except per share data) First Second Third Fourth
 
Sales $ 315,513 $ 295,207 $ 349,043 $ 362,543
 

Gross profit

  18,192   17,066   19,113   22,560
 

Income from operations before income tax expense

  1,110   623   1,247   1,799
 

Net income available to common shareholders

$ 1,480 $ 339 $ 785 $ 1,011
 
 

Basic earnings per share available to common shareholders

$ 2.15 $ 0.49 $ 1.21 $ 1.64
 

Diluted earnings per share available to common shareholders

$ 2.13 $ 0.49 $ 1.18 $ 1.60
 
 

FISCAL YEAR 2017

 
(dollars in thousands, except per share data) First Second Third Fourth
 
Sales $ 310,104 $ 294,048 $ 332,842 $ 337,990
 

Gross profit

  18,316   17,474   18,024   18,634
 

Income from operations before income tax expense

  1,879   990   798   1,771
 

Net income available to common shareholders

$ 1,046 $ 488 $ 385 $ 1,030
 
 

Basic earnings per share available to common shareholders

$ 1.54 $ 0.72 $ 0.57 $ 1.52
 

Diluted earnings per share available to common shareholders

$ 1.52 $ 0.71 $ 0.56 $ 1.48
 

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 2018

Number of common shares outstanding at September 30, 2018 615,777
Total shareholders' equity at September 30, 2018 $ 64,600,817
 
Book value per share at September 30, 2018 $ 104.91
 

September 2018

Number of common shares outstanding at September 30, 2018 615,777
Add: common shares potentially issuable for stock options and unvested restricted stock units /1/   60,611
  676,388
 
Total shareholders' equity at September 30, 2018 $ 64,600,817
Equity impact if all potential common shares were exercised or vested /1/   4,962,639
$ 69,563,456
 
Adjusted book value per share at September 30, 2018 $ 102.85
 

/1/ Assumes the exercise of all vested and unvested stock options and vesting of all outstanding restricted stock units at September 30, 2018.

 

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