On this page of StockholderLetter.com we present the 12/12/2023 shareholder letter from AMCON DISTRIBUTING CO — ticker symbol DIT. Reading current and past DIT letters to shareholders can bring important insights into the investment thesis.

 •  12/12/2023 Letter Continued (Full PDF)
 •  11/15/2024 DIT Stockholder Letter
 •  11/18/2025 DIT Stockholder Letter
 •  More "Department Stores" Category Stockholder Letters
 •  DIT Benford's Law Stock Score = 62

DIT 12/12/2023 Shareholder/Stockholder Letter Transcript:

ANNUAL
REPORT 2023

Henry   s Foods, Inc.
Alexandria, Minnesota

O U R FO OT P R I N T
AMCON Distribution Centers
Akin   s
Chamberlin   s
Earth Origins Market
A M CO N FA M I LY O F B R A N D S
    Bismarck, North Dakota
    Wheeling, West Virginia
    Crossville, Tennessee
    Omaha, Nebraska
    Quincy, Illinois
    Rapid City, South Dakota
    Springfield, Missouri
    Alexandria, Minnesota

L E T T E R TO O U R S H A R E H O L D E R S
LADIES AND GENTLEMEN,
We are pleased to report earnings of $11.6 million, or $19.46 per diluted common share for the fiscal year ended September 30, 2023.
Our shareholders    equity per share increased to $171.14. AMCON Distributing Company   s (   AMCON    or    the Company   ) Leadership
Team and Associates have achieved these financial results by implementing a focused strategic plan centered on short, medium,
and long-term objectives. The overall objective of our strategic plan is to increase shareholder value, as defined by shareholders   
equity per share, in a conservative, low risk fashion over the long term.
SHORT TERM
In the short term, which we define as up to six months, we face numerous operating challenges resulting from labor pressures,
supply chain issues, inflation, volatility in energy prices, and rising interest rates. Navigating these headwinds is the central focus
of our Management Team for the near term. Our core operating philosophy is centered on a relentless focus on managing the
Company   s balance sheet and maximizing our liquidity position. This philosophy guides our daily decision-making process.
AMCON   s span of operation encompasses a large economic footprint covering thirty-two states, and various trade classes such as
convenience stores, truck stops, superettes, rural grocery stores, and restaurants. Supply chain disruptions and workforce shortages
continue to impact our key vendors; these circumstances create difficulties for them to produce and deliver their products to
AMCON, that we then distribute to our customers. While these same labor issues also challenge AMCON, our Management Team
and Associates invest considerable energy minimizing these exogenous impacts on our delivery schedules and customers. As a
result of a focused team effort, we can deliver high quality branded consumer products over a wide territory, in a timely, reliable,
and safe manner amid a highly turbulent operating environment.
Working capital management is one of our Company   s fundamental competencies. We believe balance sheet expertise is a critical
success factor in the distribution industry, as this discipline is the foundation of our ability to generate profits and free cash flow.
The highly liquid balance sheet posture AMCON maintains supports our commitment to excellence in operations, logistics, financial
reporting, and cash management. Our business is capital intensive and requires a significant investment in inventory. We stock
approximately 20,000 SKUs of inventory, which we manage in a dynamic and real-time fashion. During fiscal 2023, we turned our
inventory 16 times while still maintaining high levels of availability on our credit lines.
The strength of AMCON   s balance sheet enables our team to act decisively when strategic and tactical opportunities present
themselves. We maintain deep in-stock inventory positions across many critical product categories. This is a crucial competitive
advantage in the current period of supply chain challenges. In addition, we continued to make targeted investments during the year
in human capital, our facilities, and the Company   s trucking fleet to support the growth of the enterprise.
The partnership AMCON has with our banking group affords us significant availability under our credit facilities. Our banking
relationships are strong and long-term in nature. We understand that we are stewards of the banks    capital and treat it as if it were
our own. In Fiscal 2023, we entered into new long-term credit facilities with our existing bank group. These facilities are tailor made
to enhance our balance sheet liquidity and expand the size of our lines as we grow.

L E T T E R TO O U R S H A R E H O L D E R S CO N T     D
MEDIUM TERM
In the medium term, which we define as six to eighteen months, our primary strategic objective is to drive the growth of our
foodservice business through our recent acquisition of
Henry   s Foods, Inc. (   Henry   s   ) in early 2023. Henry   s offers a breadth
and depth of proprietary foodservice programs and associated store level merchandising that is unparalleled in the convenience
distribution industry. Through Henry   s, we now have the capability to offer turn-key solutions that will enable our customer base
to compete head-on with the Quick Service Restaurant industry. With the additional depth and capabilities provided by
Henry   s
distribution platform, our customers    needs can be custom calibrated to their staffing and facilities.
We also seek to generate free cash flow in the medium term, which we can deploy for a wide variety of corporate purposes. We
established this objective as a medium-term goal because we frequently have access to attractive short term product procurement
opportunities from our vendor community. On a tactical basis, we deploy our credit facilities as these merchandising opportunities
present themselves. As a result, we were able to take advantage of procurement opportunities at the end of fiscal 2023, just
as we did at the end of fiscal 2022. AMCON employs a highly rigorous and disciplined process whereby we promptly liquify our
balance sheet after realizing the product merchandising opportunities. In addition, we fund various strategic initiatives such as
infrastructure, acquisitions, share repurchases, and special dividends.
During the fiscal year, we deployed approximately $3.1 million towards a return-of-capital to shareholders via a special dividend,
in addition to regularly scheduled quarterly dividends. AMCON is a balance sheet driven company and our primary focus from a
financial perspective is on risk-adjusted returns on assets and deployed capital, as we build shareholders    equity per share. Over
time, through profits, we increase the availability on our credit lines.
During the year AMCON deployed approximately $12.5 million towards capital expenditures. To maintain and extend our leadership
position in the convenience distribution industry, our operational infrastructure requires continual upgrades and new investment.
We continue to actively evaluate potential locations for new distribution centers in addition to existing facility and infrastructure
modernization projects as our customer base expands its geographic footprint. Competition for new industrial real estate is fierce,
however, AMCON maintains a disciplined approach towards such investments and expansion opportunities. We are in the process of
acquiring and installing the electronics, conveyers, racking, refrigeration, and freezer equipment necessary for our new Springfield,
Missouri, facility to become operational. This facility will be able to serve a significantly larger amount of business with enhanced
foodservice options than our present Springfield facility.
Our future as a value-added organization is centered on the development of our technology platforms. We operate in a highly
competitive environment and our technology focus is what distinguishes AMCON as a leader. Technology is a broad concept and
expenditures in this area include investments for both our customers and to enhance our own efficiency. We service approximately
7,000 locations for which there is no universal information technology (IT) interface. Hence, our philosophy to be flexible in
understanding and developing customer facing IT applications is an important competitive differentiator. To enhance that strength,
AMCON has developed the capability to design custom software that capitalizes on current advances in mobile technology. Our
ability to seamlessly integrate with our customers from an IT perspective adds value and increases customer loyalty. In addition,
the necessary network requirements to process the high volume of transactions requires constant and careful attention to maintain
security on a real-time basis. AMCON will continue to invest in the development of proprietary software, as this is an important
strategic objective of the Company.
We are pleased with the performance of our subsidiary Team Sledd, LLC (   Team Sledd   ) which operates in the Appalachian and
Mid-Atlantic regions of the United States. Team Sledd   s management are leaders in our industry associations and strong advocates
of our shared customer centric culture. Together, along with our leadership team at Henry   s, we are collaborating on many longterm foodservice growth initiatives for the
behind our initial Team Sledd investment.
Team Sledd customer base. These growth opportunities were central to our vision



 12/12/2023 Letter Continued (Full PDF)