Amcon Distributing Co 10-Q for FY2021 Q3

Amcon Distributing Co (DIT)

10-Q 2021-07-19 For: 2021-06-30

Added on April 06, 2026

About this 10-Q

Amcon Distributing Co filed this 10-Q on July 19, 2021, covering the quarter ended June 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $438.31M; up 10.4% from $396.85M a year earlier
Net income: $3.69M; up 133.7% from net income of $1.58M a year earlier
Diluted EPS: $6.48; up 133.9% from $2.77 a year earlier

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Delaware		47-0702918
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

7405 Irvington Road, Omaha NE		68122
(Address of principal executive offices)		(Zip code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	DIT	NYSE American


June 30, 2021	PAGE

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed consolidated balance sheets at June 30, 2021 (unaudited) and September 30, 2020	3

Condensed consolidated unaudited statements of operations for the three and nine months ended June 30, 2021 and 2020	4

Condensed consolidated unaudited statements of shareholders’ equity for the three and nine months ended June 30, 2021 and 2020	5

Condensed consolidated unaudited statements of cash flows for the nine months ended June 30, 2021 and 2020	6

Notes to condensed consolidated unaudited financial statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

Item 4. Controls and Procedures	22

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	23

Item 1A. Risk Factors	23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3. Defaults Upon Senior Securities	23

Item 4. Mine Safety Disclosures	23

Item 5. Other Information	23

Item 6. Exhibits	23


	June		September
	2021		2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	699,895	$	661,195
Accounts receivable, less allowance for doubtful accounts of $0.9 million at June 2021 and September 2020		36,526,770		34,278,429
Inventories, net		95,640,441		98,971,773
Prepaid and other current assets		5,769,066		2,091,645
Total current assets		138,636,172		136,003,042

Property and equipment, net		16,425,171		17,497,274
Operating lease right-of-use assets, net		17,148,745		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		7,784,753		6,744,095
Other assets		349,139		383,786
Total assets	$	188,780,930	$	188,001,273

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,788,839	$	22,108,299
Accrued expenses		11,169,530		8,306,160
Accrued wages, salaries and bonuses		3,839,072		4,761,020
Income taxes payable		495,860		567,408
Current operating lease liabilities		5,503,940		5,607,098
Current maturities of long-term debt		555,832		516,850
Total current liabilities		46,353,073		41,866,835

Credit facility		51,491,984		61,971,682
Deferred income tax liability, net		1,585,882		1,806,575
Long-term operating lease liabilities		12,000,823		14,028,606
Long-term debt, less current maturities		5,196,596		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 June 2021 and 537,715 shares outstanding at September 2020		8,834		8,697
Additional paid-in capital		24,943,292		24,282,058
Retained earnings		77,310,346		71,362,334
Treasury stock at cost		(30,867,287)		(30,861,549)
Total shareholders’ equity		71,395,185		64,791,540
Total liabilities and shareholders’ equity	$	188,780,930	$	188,001,273


	For the three months ended June				For the nine months ended June
	2021		2020		2021		2020
Sales (including excise taxes of $104.9 million and $103.6 million, and $297.4 million and $285.1 million, respectively)	$	438,313,030	$	396,854,324	$	1,221,571,294	$	1,094,841,943
Cost of sales		412,771,324		375,202,044		1,149,594,823		1,031,651,499
Gross profit		25,541,706		21,652,280		71,976,471		63,190,444
Selling, general and administrative expenses		20,501,117		18,377,641		58,123,100		55,843,266
Depreciation		741,180		801,683		2,295,390		2,318,045
		21,242,297		19,179,324		60,418,490		58,161,311
Operating income		4,299,409		2,472,956		11,557,981		5,029,133

Other expense (income):
Interest expense		329,929		461,581		1,016,902		1,321,267
Other (income), net		(43,437)		(42,525)		(169,525)		(79,222)
		286,492		419,056		847,377		1,242,045
Income from operations before income taxes		4,012,917		2,053,900		10,710,604		3,787,088
Income tax expense		1,076,000		586,000		2,916,000		1,168,000
Equity method investment earnings, net of tax		754,293		111,666		1,403,124		111,666
Net income available to common shareholders	$	3,691,210	$	1,579,566	$	9,197,728	$	2,730,754

Basic earnings per share available to common shareholders	$	6.69	$	2.79	$	16.71	$	4.84
Diluted earnings per share available to common shareholders	$	6.48	$	2.77	$	16.37	$	4.79

Basic weighted average shares outstanding		551,369		565,483		550,276		564,578
Diluted weighted average shares outstanding		569,481		569,902		561,940		569,873

Dividends declared and paid per common share	$	0.18	$	0.18	$	5.54	$	0.82

⌧	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2021

◻	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________to _________

Large accelerated filer ◻		Accelerated filer ◻		Non-accelerated filer ⌧


							Additional
	Common Stock			Treasury Stock			Paid-in		Retained
	Shares	Amount		Shares	Amount		Capital		Earnings		Total
THREE MONTHS ENDED JUNE 2020
Balance, April 1, 2020	869,367	$	8,692	(303,841)	$	(28,863,654)	$	24,224,145	$	67,184,900	$	62,554,083
Dividends on common stock, $0.18 per share	—		—	—		—		—		(107,091)		(107,091)
Compensation expense and issuance of stock in connection with equity-based awards	500		5	—		—		26,728		—		26,733
Repurchase of common stock	—		—	(1,148)		(68,725)		—		—		(68,725)
Net income	—		—	—		—		—		1,579,566		1,579,566
Balance, June 30, 2020	869,867	$	8,697	(304,989)	$	(28,932,379)	$	24,250,873	$	68,657,375	$	63,984,566

THREE MONTHS ENDED JUNE 2021
Balance, April 1, 2021	883,589	$	8,834	(332,220)	$	(30,867,287)	$	24,917,765	$	73,724,722	$	67,784,034
Dividends on common stock, $0.18 per share	—		—	—		—		—		(105,586)		(105,586)
Compensation expense and issuance of stock in connection with equity-based awards	—		—	—		—		25,527		—		25,527
Repurchase of common stock	—		—	—		—		—		—		—
Net income	—		—	—		—		—		3,691,210		3,691,210
Balance, June 30, 2021	883,589	$	8,834	(332,220)	$	(30,867,287)	$	24,943,292	$	77,310,346	$	71,395,185


	For the three months ended June 2021		For the nine months ended June 2021		For the three months ended June 2020
Sales	$	179,676,748	$	502,704,216	$	171,805,323
Gross profit		9,711,966		25,279,274		6,874,963
Net income before income taxes		2,034,258		3,979,078		335,093
Net income attributable to AMCON, net of tax		754,293		1,403,124		111,666


	June 2021		September 2020
Real Estate Loan, interest payable at a fixed rate of 3.625% with monthly installments of principal and interest of $47,399 through February 2025 with remaining principal due March 2025, collateralized by three distribution facilities	$	4,599,036	$	1,866,231
Note payable, interest payable at a fixed rate of 4.50% with quarterly installments of principal and interest of $49,114 through June 2023 with remaining principal due September 2023		1,153,392		1,259,413
		5,752,428		3,125,644
Less current maturities		(555,832)		(516,850)
	$	5,196,596	$	2,608,794


	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED JUNE 2021
External revenues:
Cigarettes	$	294,690,427	$	—	$	—	$	294,690,427
Tobacco		68,525,147		—		—		68,525,147
Confectionery		25,703,325		—		—		25,703,325
Health food		—		11,745,769		—		11,745,769
Foodservice & other		37,648,362		—		—		37,648,362
Total external revenue		426,567,261		11,745,769		—		438,313,030
Depreciation		445,831		295,349		—		741,180
Operating income (loss)		6,349,783		621,421		(2,671,795)		4,299,409
Interest expense		56,924		—		273,005		329,929
Income (loss) from operations before taxes		6,304,328		624,447		(2,915,858)		4,012,917
Equity method investment earnings, net of tax		—		—		754,293		754,293
Total assets		159,766,283		17,140,050		11,874,597		188,780,930
Capital expenditures		384,429		133,732		—		518,161


	2021			2020			Incr (Decr)		% Change
CONSOLIDATED:
Sales(1)	$	438,313,030		$	396,854,324		$	41,458,706	10.4
Cost of sales		412,771,324			375,202,044			37,569,280	10.0
Gross profit		25,541,706			21,652,280			3,889,426	18.0
Gross profit percentage		5.8	%		5.5	%

Operating expense	$	21,242,297		$	19,179,324		$	2,062,973	10.8
Operating income		4,299,409			2,472,956			1,826,453	73.9
Interest expense		329,929			461,581			(131,652)	(28.5)
Income tax expense		1,076,000			586,000			490,000	83.6
Net income		3,691,210			1,579,566			2,111,644	133.7

BUSINESS SEGMENTS:
Wholesale
Sales	$	426,567,261		$	385,316,005		$	41,251,256	10.7
Gross profit		21,157,711			17,564,000			3,593,711	20.5
Gross profit percentage		5.0	%		4.6	%
Retail
Sales	$	11,745,769		$	11,538,319		$	207,450	1.8
Gross profit		4,383,995			4,088,280			295,715	7.2
Gross profit percentage		37.3	%		35.4	%



	31.1	Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, pursuant to section 302 of the Sarbanes-Oxley Act

	31.2	Certification by Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary, pursuant to section 302 of the Sarbanes-Oxley Act

	32.1	Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished pursuant to section 906 of the Sarbanes-Oxley Act

	32.2	Certification by Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary, furnished pursuant to section 906 of the Sarbanes-Oxley Act

	101	Interactive Data File (filed herewith electronically)

	104	Cover Page Interactive Data File – formatted in Inline XBRL and included as Exhibit 101

	AMCON DISTRIBUTING COMPANY
	(registrant)

Date: July 19, 2021	/s/ Christopher H. Atayan
	Christopher H. Atayan,
	Chief Executive Officer and Chairman

Date: July 19, 2021	/s/ Charles J. Schmaderer
	Charles J. Schmaderer,
	Vice President, Chief Financial Officer and Secretary
	(Principal Financial and Accounting Officer)


	June		June
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,197,728	$	2,730,754
Adjustments to reconcile net income from operations to net cash flows from (used in) operating activities:
Depreciation		2,295,390		2,318,045
Equity method investment earnings, net of tax		(1,403,124)		(111,666)
(Gain) loss on sales of property and equipment		(8,057)		17,042
Equity-based compensation		1,819,272		765,704
Deferred income taxes		(220,693)		(2,862)
Provision for losses on doubtful accounts		86,000		349,000
Inventory allowance		238,148		182,218
Changes in assets and liabilities:
Accounts receivable		(2,334,341)		(9,309,422)
Inventories		3,093,184		20,152,080
Prepaid and other current assets		(3,677,421)		(373,414)
Equity method investment distributions		828,466		—
Other assets		34,647		(126,364)
Accounts payable		2,680,540		2,040,386
Accrued expenses and accrued wages, salaries and bonuses		804,983		(1,424,472)
Other long-term liabilities		(169,854)		125,744
Income taxes payable and receivable		(537,548)		794,027
Net cash flows from (used in) operating activities		12,727,320		18,126,800

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,254,958)		(2,901,134)
Proceeds from sales of property and equipment		39,728		16,600
Investment in equity method investee		—		(6,500,000)
Issuance of note receivable		—		(3,500,000)
Net cash flows from (used in) investing activities		(1,215,230)		(12,884,534)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility		1,217,375,073		1,083,878,207
Repayments under revolving credit facility		(1,227,854,771)		(1,087,870,919)
Proceeds from borrowings on long-term debt		3,000,000		—
Principal payments on long-term debt		(373,216)		(397,936)
Proceeds from exercise of stock options		—		25,750
Repurchase of common stock		(5,738)		(100,524)
Dividends on common stock		(3,249,716)		(487,776)

July
Date: July 19, 2021	/s/ Christopher H. Atayan
	Christopher H. Atayan,
	Chief Executive Officer and Chairman

Ju
Date: July 19, 2021	/s/ Christopher H. Atayan
	Christopher H. Atayan
	Title: Chief Executive Officer and Chairman

Date: July 19, 2021	/s/ Charles J. Schmaderer
	Charles J. Schmaderer
	Title: Vice President, Chief Financial Officer and Secretary