AMCON DISTRIBUTING CO SEC 10-K Report

AMCON Distributing Company, a leading wholesale distributor and retailer, has released its Form 10-K report for fiscal 2025. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive wholesale and retail markets. AMCON operates through two main segments: the Wholesale Segment, which distributes consumer products to approximately 8,500 retail outlets across 34 states, and the Retail Segment, which operates 15 health food retail stores in the Midwest and Florida.

Financial Highlights

• Sales: $2,816.7 million, reflecting a $105.7 million increase from fiscal 2024, driven by acquisitions and price increases.
• Gross Profit: $188.2 million, consistent with a gross profit percentage of 6.7% for both fiscal 2025 and 2024.
• Operating Income: $12.6 million, a decrease from $18.0 million in fiscal 2024, impacted by increased operating expenses.
• Net Income Available to Common Shareholders: $0.6 million, down from $4.3 million in fiscal 2024, influenced by higher operating expenses and interest costs.
• Basic Earnings Per Share Available to Common Shareholders: $0.93, compared to $7.24 in fiscal 2024, reflecting the decrease in net income.
• Diluted Earnings Per Share Available to Common Shareholders: $0.92, compared to $7.15 in fiscal 2024, consistent with the decline in net income.

Business Highlights

• Company Overview: AMCON operates through two main segments: the Wholesale Segment and the Retail Segment. The Wholesale Segment distributes over 20,000 consumer products, including cigarettes, candy, beverages, groceries, and health products, to approximately 8,500 retail outlets across 34 states. The Retail Segment operates 15 health food retail stores under the Healthy Edge Retail Group, offering over 32,000 natural and organic products.
• Wholesale Segment Operations: The Wholesale Segment is one of the largest in the U.S., operating 14 distribution centers with a total of 1.7 million square feet of space.
• Retail Segment Operations: The Retail Segment's stores are positioned as destinations for health-conscious consumers, offering a wide range of natural and organic products.
• Competitive Strengths: AMCON benefits from industry experience, flexible distribution capabilities, and a broad product selection, which help it maintain a competitive edge in both wholesale and retail markets.
• Business Strategy: The company focuses on maximizing liquidity, developing customer-focused technology, expanding its foodservice platform, and growing through acquisitions to enhance shareholder value.
• Principal Products: Cigarettes account for 61% of consolidated revenue in fiscal 2025, while other products like candy and groceries make up the remaining 39%.
• Geographical Performance: The company serves customers primarily in the Central, Rocky Mountain, Great Lakes, Mid-South, and Mid-Atlantic regions.
• New Acquisitions: In fiscal 2025, AMCON acquired Arrowrock Supply, a wholesale distributor in Idaho, and opened a new distribution center in Colorado City, Colorado, expanding its geographic footprint.
• Future Outlook: The company plans to continue expanding its geographic reach and enhancing its service capabilities, positioning itself as a viable alternative to national distributors.

Strategic Initiatives

• Strategic Initiatives: The company undertook strategic initiatives to optimize its organizational structure and invested in higher margin growth categories such as foodservice. It also focused on developing proprietary technology solutions to differentiate itself from competitors. Additionally, the company expanded its geographic footprint by acquiring Arrowrock Supply and opening a new distribution center in Colorado City, Colorado, enhancing its position as the third largest Convenience Distributor in the U.S. by territory covered.
• Capital Management: The company primarily finances its operations through three credit facility agreements with a combined borrowing capacity of $305 million. As of September 2025, $126.8 million was outstanding, leaving $103.5 million available. The company paid cash dividends of $0.6 million, or $1.00 per common share, in both fiscal 2025 and 2024. It also repurchased common stock worth $1.1 million during fiscal 2025. The company maintains a strong focus on managing its liquidity position, which is influenced by working capital levels, customer credit risk, and access to bank credit.
• Future Outlook: The company plans to leverage its expanded geographic footprint to create new business development opportunities and views its new distribution center and recent acquisitions as platforms for future growth. It remains committed to monitoring regulatory changes and managing inflationary pressures while continuing to explore strategic investments in technology and higher margin categories to drive long-term growth.

Challenges and Risks

• Competitive Environment: The company operates in a highly competitive wholesale distribution industry, facing competition from national and regional wholesalers, as well as online platforms like Amazon. The retail segment also faces intense competition from specialty food retailers and conventional supermarkets, which could impact market share and profitability.
• Regulatory Risks: The company is subject to extensive regulation at federal, state, and local levels, particularly concerning tobacco products. Changes in regulations or the imposition of new regulations by the FDA could negatively impact operations. The declining demand for cigarettes, due to health concerns and regulatory pressures, poses a significant risk to revenue. Additionally, the company faces risks from potential increases in excise taxes on tobacco products, which could reduce demand and shift sales to lower-margin products.
• Industry Trends: The wholesale segment is vulnerable to divestiture and consolidation trends within the convenience store industry, which could lead to customer attrition. Volatility in fuel prices and changes in manufacturers' pricing strategies could also adversely affect profit margins. The retail segment faces risks from increased competition in the health food industry and potential disruptions in the supply of quality natural and organic products.
• Inflationary Pressures: The company is navigating a challenging operating environment with inflationary pressures impacting costs across product, labor, and insurance. Strategic initiatives include optimizing organizational structure, investing in higher-margin growth categories like foodservice, and expanding geographic footprint through acquisitions and new distribution centers.
• Market Risks: The company is exposed to market risks such as interest rate fluctuations, which could impact profitability due to variable debt levels. Additionally, systemic pressures in the banking system and disruptions in credit markets could affect liquidity and access to capital. The company does not currently hedge against interest rate risk or fuel costs, which could lead to increased financial vulnerability in volatile market conditions.

SEC Filing: AMCON DISTRIBUTING CO [ DIT ] - 10-K - Nov. 07, 2025