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AMCON Distributing Company Reports Fully Diluted Earnings Per Share of $0.56 for the Quarter Ended June 30, 2017

DIT | July 18, 2017

AMCON Distributing Company Reports Fully Diluted Earnings Per Share of $0.56 for the Quarter Ended June 30, 2017

AMCON Distributing Company (“AMCON”) (NYSE MKT:DIT), an Omaha, Nebraska based consumer products company is pleased to announce fully diluted earnings per share of $0.56 on net income available to common shareholders of $0.4 million for our third fiscal quarter ended June 30, 2017.

“Both of the industries in which we operate are undergoing transformative changes based on a number of factors including increased competition, shifts in consumer shopping habits, and new technologies. These developments have resulted in consolidation across all segments of the food and convenience store supply chains including manufacturers, distributors, and retailers. Given this operating environment, we remain committed to our focused strategic plan which calls for ongoing investments in new programs, services, and technologies to enhance and support our leadership position in the convenience distribution industry,” said Christopher H. Atayan, AMCON’s Chairman and Chief Executive Officer. He further noted, “We are actively seeking acquisitions that can benefit from our extensive platform of customer service. We are also looking carefully at a number of geographic growth opportunities as our customer base expands.”

For the third fiscal quarter of 2017, our Wholesale Distribution Segment reported revenues of $326.5 million and operating income of $3.1 million. Our Retail Health Food Segment reported revenues of $6.4 million and an operating loss of $0.6 million for the same period.

“Convenience store operators are increasingly looking to AMCON for easy to use technology solutions that assist them in areas such as category and profitability management and to enhance efficiency. Additionally, interest in building new non-tobacco revenue streams continues to accelerate amongst our customer base,” said Kathleen M. Evans, President of AMCON’s Wholesale Distribution segment. She further noted, “We are implementing the investments we’ve made in our trucking fleet and technology to further support our customers’ geographic growth.”

“We are pleased with the recent extensive renovations and update to our store in Oviedo, Florida. Our management team is developing market driven enhancements to our core business model in order for us to compete in this highly challenging retail environment,” said Clifford Ginn, President of AMCON’s Retail Health Food Segment. He further noted, “We are working diligently on building our next generation store in the Lakeland, Florida market.”

“We actively manage our working capital and liquidity which provides AMCON the ability to respond quickly to the dynamic environments in which both of our business segments operate. This conservative approach provides us significant flexibility to act in the long term best interest of the many constituencies we serve. Both of our business segments are utilizing financial resources in the course of making the capital and operational investments necessary for long term competitive success,” said Andrew C. Plummer, AMCON’s Chief Financial Officer. “We were pleased to close the June 30, 2017 quarter with shareholders’ equity of $67.3 million and consolidated debt of $13.4 million.”

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 fifteen (15) 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
June 30, 2017 and September 30, 2016

	June			September
	2017			2016
	(Unaudited)
ASSETS
Current assets:
Cash	$	121,790		$	605,380
Accounts receivable, less allowance for doubtful accounts of $0.7 million at June 2017 and $0.7 million at September 2016		31,035,527			30,033,104
Inventories, net		49,101,309			48,404,882
Deferred income taxes		1,352,383			1,441,919
Income taxes receivable		157,900			164,959
Prepaid and other current assets		7,836,179			8,608,049
Total current assets		89,605,088			89,258,293

Property and equipment, net		12,867,402			12,607,877
Goodwill		6,349,827			6,349,827
Other intangible assets, net		3,560,561			3,759,311
Other assets		326,440			288,082
Total assets	$	112,709,318		$	112,263,390
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,329,745		$	18,164,983
Accrued expenses		7,106,294			6,792,884
Accrued wages, salaries and bonuses		2,415,122			3,580,996
Current maturities of long-term debt		370,803			362,495
Total current liabilities		28,221,964			28,901,358

Credit facility		10,328,098			10,537,226
Deferred income taxes		4,052,400			4,021,569
Long-term debt, less current maturities		2,742,485			3,021,824
Other long-term liabilities		33,111			30,815

Shareholders’ equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized		—			—
Common stock, $.01 par value, 3,000,000 shares authorized, 678,938 shares outstanding and issued at June 2017 and 677,057 shares outstanding and issued at September 2016		8,314			8,184
Additional paid-in capital		20,803,998			19,525,554
Retained earnings		60,033,389			58,693,241
Treasury stock at cost		(13,514,441	)		(12,476,381	)
Total shareholders’ equity		67,331,260			65,750,598
Total liabilities and shareholders' equity	$	112,709,318		$	112,263,390

AMCON Distributing Company and Subsidiaries
Condensed Consolidated Unaudited Statements of Operations
for the three and nine months ended June 30, 2017 and 2016

	For the three months ended June						For the nine months ended June
	2017			2016			2017			2016
Sales (including excise taxes of $95.1 million and $98.9 million, and $271.8 million and $284.9 million, respectively)	$	332,842,200		$	333,398,723		$	936,994,299		$	951,856,098
Cost of sales		314,818,453			314,235,192			883,180,664			896,190,425
Gross profit		18,023,747			19,163,531			53,813,635			55,665,673
Selling, general and administrative expenses		16,587,055			15,335,808			48,105,878			45,951,300
Depreciation and amortization		474,890			512,543			1,531,292			1,655,173
		17,061,945			15,848,351			49,637,170			47,606,473
Operating income		961,802			3,315,180			4,176,465			8,059,200

Other expense (income):
Interest expense		180,266			188,798			545,719			562,654
Other (income), net		(16,513	)		(35,552	)		(37,250	)		(98,634	)
		163,753			153,246			508,469			464,020
Income from operations before income tax expense		798,049			3,161,934			3,667,996			7,595,180
Income tax expense		413,000			1,310,000			1,748,000			3,241,000
Net income		385,049			1,851,934			1,919,996			4,354,180
Preferred stock dividend requirements		—			(48,642	)		—			(146,462	)
Net income available to common shareholders	$	385,049		$	1,803,292		$	1,919,996		$	4,207,718

Basic earnings per share available to common shareholders	$	0.57		$	3.03		$	2.82		$	6.91
Diluted earnings per share available to common shareholders	$	0.56		$	2.62		$	2.78		$	6.07

Basic weighted average shares outstanding		678,938			596,112			679,858			609,240
Diluted weighted average shares outstanding		691,701			707,300			690,840			717,875

Dividends declared and paid per common share	$	0.18		$	0.18		$	0.82		$	0.82

AMCON Distributing Company and Subsidiaries
Condensed Consolidated Unaudited Statements of Cash Flows
for the nine months ended June 30, 2017 and 2016

	June			June
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,919,996		$	4,354,180
Adjustments to reconcile net income from operations to net cash flows from operating activities:
Depreciation		1,332,542			1,389,756
Amortization		198,750			265,417
Gain on sale of property and equipment		(30,854	)		(69,215	)
Equity-based compensation		1,193,005			1,050,644
Deferred income taxes		120,367			238,728
Provision (recovery) for losses on doubtful accounts		42,000			(39,000	)
Provision for losses on inventory obsolescence		4,852			2,014
Other		2,296			(5,034	)
Changes in assets and liabilities:
Accounts receivable		(1,044,423	)		(2,027,155	)
Inventories		(701,279	)		10,120,804
Prepaid and other current assets		771,870			(3,320,720	)
Other assets		(38,358	)		27,897
Accounts payable		322,325			924,567
Accrued expenses and accrued wages, salaries and bonuses		(659,813	)		2,825
Income taxes receivable		7,059			476,352
Net cash flows from operating activities		3,440,335			13,392,060

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,761,431	)		(1,013,988	)
Proceeds from sales of property and equipment		42,655			112,157
Net cash flows from investing activities		(1,718,776	)		(901,831	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on bank credit agreements		(209,128	)		(7,193,768	)
Principal payments on long-term debt		(271,031	)		(262,677	)
Repurchase of common stock		(1,038,060	)		(4,044,437	)
Dividends paid on convertible preferred stock		—			(146,462	)
Dividends on common stock		(579,848	)		(526,076	)
Withholdings on the exercise of equity-based awards		(107,082	)		(121,348	)
Net cash flows from financing activities		(2,205,149	)		(12,294,768	)
Net change in cash		(483,590	)		195,461
Cash, beginning of period		605,380			219,536
Cash, end of period	$	121,790		$	414,997

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	545,719		$	576,681
Cash paid during the period for income taxes		1,620,574			2,525,920

Supplemental disclosure of non-cash information:
Equipment acquisitions classified in accounts payable		9,881			51,874
Issuance of common stock in connection with the vesting and exercise of equity-based awards		1,262,763			1,174,981