AMCON Distributing Company Reports Results for the Quarter Ended December 31, 2020

Rhea-AI Summary

AMCON Distributing Company (NYSE American: DIT) reported a fully diluted EPS of $5.57 and net income of $3.1 million for Q1 FY2021, despite a challenging operational environment. The wholesale distribution segment generated $393.6 million in revenue with an operating income of $5.8 million, while the retail health food segment reported $11.1 million in revenue but an operating loss of $0.1 million. The company is actively seeking acquisition opportunities and has successfully refinanced certain term loans, positioning itself favorably in the current interest rate landscape.

Positive

• Q1 FY2021 fully diluted EPS of $5.57.
• Wholesale segment revenue of $393.6 million with $5.8 million operating income.
• Successful refinancing of term loans to optimize capital structure.
• Continued focus on acquisition opportunities aligning with growth strategy.

Negative

• Retail health food segment reported an operating loss of $0.1 million.

AMCON Distributing Company (“AMCON”) (NYSE American: DIT), an Omaha, Nebraska based consumer products company, is pleased to announce fully diluted earnings per share of $5.57 on net income available to common shareholders of $3.1 million for its first fiscal quarter ended December 31, 2020.

“We are pleased with our results for the first fiscal quarter. AMCON faced a challenging operating environment. Our management team was able to deliver to our customers a safe and seamless level of customer service,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. Mr. Atayan further noted, “AMCON remains focused on our long term strategic initiatives. We continue to seek out acquisition opportunities for distributors who want to align with our growing platform and customer centric management philosophy.”

The wholesale distribution segment reported revenues of $393.6 million and operating income of $5.8 million for the first quarter of fiscal 2021. The retail health food segment reported revenues of $11.1 million and an operating loss of $0.1 million for the first quarter of fiscal 2021.

“We work interactively with our customers to develop customized foodservice and technology platforms. This collaborative approach enables our customers to enhance their profitability, which is especially important in light of rapidly changing market conditions. Our customer base continues to grow geographically and AMCON is deploying the capital and human resources necessary to support this growth,” said Andrew C. Plummer, AMCON’s President and Chief Operating Officer.

Charles J. Schmaderer, AMCON’s Chief Financial Officer said, “We are pleased with the progress of our strategic investment in Team Sledd, LLC. We ended the quarter with $65.6 million of shareholders’ equity and continue to work closely with our banking group to optimize our capital structure. During the quarter, we refinanced and extended the maturity of certain term loans allowing us to capitalize on the current interest rate environment.”

AMCON’s Healthy Edge Retail Group plays an important role in the health and wellness of the communities it serves. Throughout the pandemic, our management team has worked diligently to offer a continuous and safe shopping experience for customers. Our long term relationship with the organic/natural products vendor community has enabled our stores to meet the demands of our customers for total wellness solutions. Our strategy is to offer a broad selection of the highest quality organic and natural merchandise available supported by a high degree of customer service not found at other big box retailers within our industry.

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-one (21) health and natural product retail stores in the Midwest and Florida. The retail stores operate under the names Akin’s Natural Foods www.akins.com in its Midwest market, and Chamberlin's Natural Foods www.chamberlins.com and Earth Origins Market www.earthoriginsmarket.com in its Florida market.

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 December 31, 2020 and September 30, 2020
		December			September
		2020			2020
		(Unaudited)
ASSETS
Current assets:
Cash		$	515,098		$	661,195
Accounts receivable, less allowance for doubtful accounts of $0.8 million at December 2020 and $0.9 million at September 2020			29,712,850			34,278,429
Inventories, net			67,832,187			98,971,773
Prepaid and other current assets			7,884,267			2,091,645
Total current assets			105,944,402			136,003,042
Property and equipment, net			17,171,501			17,497,274
Operating lease right-of-use assets, net			18,660,239			18,936,126
Note receivable			3,500,000			3,500,000
Goodwill			4,436,950			4,436,950
Other intangible assets, net			500,000			500,000
Equity method investment			7,189,433			6,744,095
Other assets			343,593			383,786
Total assets		$	157,746,118		$	188,001,273
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	17,054,417		$	22,108,299
Accrued expenses			11,137,468			8,306,160
Accrued wages, salaries and bonuses			2,468,758			4,761,020
Income taxes payable			465,553			567,408
Current operating lease liabilities			5,756,176			5,607,098
Current maturities of long-term debt			512,344			516,850
Total current liabilities			37,394,716			41,866,835
Credit facility			33,051,949			61,971,682
Deferred income tax liability, net			1,939,311			1,806,575
Long-term operating lease liabilities			13,575,388			14,028,606
Long-term debt, less current maturities			5,477,181			2,608,794
Other long-term liabilities			757,387			927,241
Shareholders’ equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized			—			—
Common stock, $.01 par value, 3,000,000 shares authorized, 551,369 shares outstanding at December 2020 and 537,715 shares outstanding at September 2020			8,834			8,697
Additional paid-in capital			25,007,239			24,282,058
Retained earnings			71,401,400			71,362,334
Treasury stock at cost			(30,867,287)			(30,861,549)
Total shareholders’ equity			65,550,186			64,791,540
Total liabilities and shareholders’ equity		$	157,746,118		$	188,001,273

AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Operations for the three months ended December 31, 2020 and 2019
		For the three months ended December
		2020			2019
Sales (including excise taxes of $100.5 million and $94.0 million, respectively)		$	404,744,774		$	360,101,103
Cost of sales			381,282,795			339,256,392
Gross profit			23,461,979			20,844,711
Selling, general and administrative expenses			18,599,816			18,952,735
Depreciation and amortization			774,285			725,461
			19,374,101			19,678,196
Operating income			4,087,878			1,166,515
Other expense (income):
Interest expense			376,430			472,423
Other (income), net			(41,823)			(6,778)
			334,607			465,645
Income from operations before income taxes			3,753,271			700,870
Income tax expense			1,011,000			249,000
Equity method investment earnings, net of tax			335,339			—
Net income available to common shareholders		$	3,077,610		$	451,870
Basic earnings per share available to common shareholders		$	5.61		$	0.80
Diluted earnings per share available to common shareholders		$	5.57		$	0.80
Basic weighted average shares outstanding			548,125			562,578
Diluted weighted average shares outstanding			552,059			567,794
Dividends declared and paid per common share		$	0.18		$	0.18

AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Shareholders’ Equity for the three months ended December 31, 2020 and 2019
												Additional
		Common Stock					Treasury Stock					Paid-in			Retained
		Shares		Amount			Shares		Amount			Capital			Earnings			Total
THREE MONTHS ENDED DECEMBER 2019
Balance, October 1, 2019		856,039		$	8,561		(303,425)		$	(28,831,855)		$	23,165,639		$	66,414,397		$	60,756,742
Dividends on common stock, $0.46 per share		—			—		—			—			—			(273,630)			(273,630)
Compensation expense and issuance of stock in connection with equity-based awards		13,328			131		—			—			1,027,315			—			1,027,446
Repurchase of common stock		—			—		(109)			(8,156)			—			—			(8,156)
Net income		—			—		—			—			—			451,870			451,870
Balance, December 31, 2019		869,367		$	8,692		(303,534)		$	(28,840,011)		$	24,192,954		$	66,592,637		$	61,954,272
THREE MONTHS ENDED DECEMBER 2020
Balance, October 1, 2020		869,867		$	8,697		(332,152)		$	(30,861,549)		$	24,282,058		$	71,362,334		$	64,791,540
Dividends on common stock, $5.18 per share		—			—		—			—			—			(3,038,544)			(3,038,544)
Compensation expense and issuance of stock in connection with equity-based awards		13,722			137		—			—			725,181			—			725,318
Repurchase of common stock		—			—		(68)			(5,738)			—			—			(5,738)
Net income		—			—		—			—			—			3,077,610			3,077,610
Balance, December 31, 2020		883,589		$	8,834		(332,220)		$	(30,867,287)		$	25,007,239		$	71,401,400		$	65,550,186

AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Cash Flows for the three months ended December 31, 2020 and 2019
		December			December
		2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	3,077,610		$	451,870
Adjustments to reconcile net income from operations to net cash flows from (used in) operating activities:
Depreciation			774,285			725,461
Equity method investment earnings, net of tax			(335,339)			—
Loss (gain) on sales of property and equipment			(2,000)			—
Equity-based compensation			346,891			129,931
Deferred income taxes			132,736			154,792
Provision (recovery) for losses on doubtful accounts			(24,000)			371,000
Inventory allowance			172,137			51,587
Other			—			(42,011)
Changes in assets and liabilities:
Accounts receivable			4,589,579			(7,171,661)
Inventories			30,967,449			39,333,140
Prepaid and other current assets			(5,792,622)			(1,578,437)
Other assets			40,193			42,052
Accounts payable			(5,069,889)			(1,623,841)
Accrued expenses and accrued wages, salaries and bonuses			(1,793,704)			(2,509,401)
Other long-term liabilities			(169,854)			—
Income taxes payable and receivable			(211,854)			95,772
Net cash flows from (used in) operating activities			26,701,618			28,430,254
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(432,505)			(1,228,462)
Proceeds from sales of property and equipment			2,000			—
Net cash flows from (used in) investing activities			(430,505)			(1,228,462)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility			385,943,710			330,596,076
Repayments under revolving credit facility			(414,863,443)			(357,448,761)
Proceeds from borrowings on long-term debt			3,000,000			—
Principal payments on long-term debt			(136,119)			(131,580)
Repurchase of common stock			(5,738)			(8,156)
Dividends on common stock			(105,599)			(107,084)
Settlement and withholdings of equity-based awards			(250,021)			—
Net cash flows from (used in) financing activities			(26,417,210)			(27,099,505)
Net change in cash			(146,097)			102,287
Cash, beginning of period			661,195			337,704
Cash, end of period		$	515,098		$	439,991
Supplemental disclosure of cash flow information:
Cash paid during the period for interest		$	426,655		$	519,459
Cash paid (refunded) during the period for income taxes			1,090,119			(1,563)
Supplemental disclosure of non-cash information:
Equipment acquisitions classified in accounts payable		$	16,007		$	234,816
Dividends declared, not paid			2,932,945			166,546
Issuance of common stock in connection with the vesting and exercise of equity-based awards			949,812			990,653

 

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FAQ

What were AMCON's earnings per share for Q1 FY2021?

AMCON reported fully diluted earnings per share of $5.57 for Q1 FY2021.

What is AMCON's revenue from its wholesale distribution segment for Q1 FY2021?

The wholesale distribution segment generated revenues of $393.6 million for Q1 FY2021.

Did AMCON experience any losses in its retail health food segment?

Yes, the retail health food segment reported an operating loss of $0.1 million for Q1 FY2021.

How is AMCON managing its capital structure?

AMCON refinanced and extended the maturity of certain term loans to capitalize on favorable interest rates.

What is AMCON's strategy for growth?

AMCON is focused on long-term strategic initiatives, including seeking acquisition opportunities to enhance its platform.