DIT 10-K & 10-Q changes, risk factors and insider trading
Amcon Distributing Co. · NYSE · Wholesale-Groceries, General Line · CIK 928465 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
“Additionally, many of our Wholesale Segment customers are thinly capitalized and their access to credit may be impacted by changes in economic conditions, systemic pressures in the banking system, including disruptions in the credit markets, rising interest rates or other factors, which may affect their ability to operate as a going concern, presenting additional credit risk for the Company. A period of economic downturn or economic deterioration could result in lower sales and profitability as well as an increased probability of customer credit defaults.”see in full comparison
“Additionally, many of our Wholesale Segment customers are thinly capitalized and their access to credit may be impacted by changes in economic conditions, systemic pressures in the banking system, including disruptions in the credit markets, rising interest rates or other factors, which may affect their ability to operate as a going concern, presenting additional credit risk for the Company. A period of economic downturn or economic deterioration could result in lower sales and profitability as well as customer credit defaults.”see in full comparison
“Our results of operations and financial condition are particularly sensitive to changes in the overall economy, including the level of consumer discretionary spending. Consumer discretionary spending may be negatively impacted by inflation, rising interest rates, tariffs and trade restrictions, job losses as a result of increasing automation (AI), recessions or other general economic uncertainties or downturns. …”see in full comparison
“Any instances of, or reports linking products we sell, related to foodborne illnesses, food tampering, contamination, mislabeling or other food-safety issues could damage the value of our brand and may lead to product liability and personal injury claims, litigation, government investigations and damages. …”see in full comparison
“We are subject to laws, rules and regulations that restrict the collection, use and security of personal information of consumers, employees or others. Regulatory actions seeking to impose significant financial penalties for noncompliance and/or legal actions (including those pursuant to laws providing for private rights of action by consumers) could be brought against the Company in the event that data or consumer information is compromised and/or misused, or from perceived or actual non-compliance with data protection, privacy or artificial intelligence requirements. …”see in full comparison
“Our results of operations and financial condition are particularly sensitive to changes in the overall economy, including the level of consumer discretionary spending. Consumer discretionary spending may be negatively impacted by inflation, rising interest rates, recessions or other general economic uncertainties or downturns. Changes in discretionary spending patterns may decrease demand from our convenience store customers and/or impact the demand for natural food products in our retail health food stores as customers purchase less expensive product alternatives.”see in full comparison
Full comparison: every changed paragraph (24)
If any of the following risks actually materialize, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our common stock could decline substantially. This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including the risks described below and elsewhere in this Annual Report. See “Forward-Looking Statements” under Item 7 of this report for a discussion of forward-looking statements.
Our cigarette, tobacco and tobacco-related products are subject to extensive regulation at the federal, state and local levels. In 2009, the Family Smoking Prevention and Tobacco Control Act was signed into law, which granted the FDA the authority to regulate the production, distribution, and marketing of tobacco products in the United States. Specifically, the legislation established an FDA office to regulate changes to nicotine yields, chemicals, flavors, ingredients, and the labeling used to produce and market tobacco products. The FDA office is financed through user fees paid by tobacco companies, which is passed on to wholesale distributors and end consumers in the form of higher costs.
To date, most of the regulatory and compliance burden related to this legislation has fallen upon product manufacturers. However, if the FDA were to impose new regulations impacting wholesale distributors that we are not able to comply with, we could face remedial actions such as fines, suspension of product distribution rights, and/or termination of operations. Further, if the FDA were to issue product bans or product restrictions on cigarettes, tobacco or other nicotine delivery devices, our future revenue stream could materially decrease. If any of these items were to occur, our results from operations, cash flow, business, and overall financial condition could be negatively impacted.
The current trend is toward increasing regulation of the tobacco industry and vapor products alike, which differ across the various U.S. states in which we conduct business. Extensive and inconsistent regulation by multiple states and at different governmental levels could prove to be particularly disruptive to our business. There can be no assurance that we or the manufacturers we rely on as suppliers will be in compliance with all of these regulations. A failure by us or our manufacturers to comply with these laws and regulations could negatively impact our results from operations, cash flow, business, and overall financial condition.
In 1994, the Mississippi attorney general brought an action against various tobacco industry members on behalf of the state to recover state funds paid for health-care costs related to tobacco use. Subsequently, most other states sued the major U.S. cigarette manufacturers based on similar theories. The cigarette manufacturer defendants settled the first four of these cases with Mississippi, Florida, Texas and Minnesota by separate agreements. These states are referred to as non-MSA states. In November 1998, the major U.S. tobacco product manufacturers entered into the Master Settlement Agreement (“MSA”) with the remaining 46 states,U.S. the District of Columbiastates and certain U.S. territories.territories Theconcerning MSAthe advertising, marketing and thepromotion otherof statetobacco settlementproducts agreementsand settledto health-caresettle asserted and unasserted health care cost recovery actions and monetaryother claims relatingrelated to future conduct arising out of the use of, or exposure to, tobacco products,use. imposed a streamCertain of future payment obligations onthe major U.S. cigarettetobacco product manufacturers andhad placedpreviously significantentered restrictionsinto on the abilityagreements to marketsettle similar claims brought by Mississippi, Florida, Texas and sell cigarettes.Minnesota. The payments required under the MSA resulted in the products sold by the participating manufacturers being priced at higher levels than the products sold by non-MSA manufacturers.
In order to limit our potential tobacco-related liabilities, we try to limit our purchases of cigarettes from non-MSA manufacturers for sale in MSAstates states.covered by the MSA. The benefits of liability limitations and indemnities we are entitled to under the MSA do not apply to sales of cigarettes manufactured by non-MSA manufacturers. From time-to-time, however, we find it necessary to purchase a limited amount of cigarettes from non-MSA manufacturers. For example, during a transition period while integrating distribution operations from an acquisition we may need to purchase and distribute cigarettes manufactured by non-MSA manufacturers to satisfy the demands of customers of the acquired business. With respect to sales of such non-MSA cigarettes, we could be subject to litigation that could expose us to liabilities for which we would not be indemnified.
In connection with the MSA, we are indemnified by many of the tobacco product manufacturers from whom we purchase cigarettes and other tobacco products for liabilities arising from the sale of the tobacco products that they supply to us. However, if litigation challenging the validity of the MSA were to be successful and all or part of the MSA is invalidated, we could be subject to substantial litigation due to the sales of cigarettes and other tobacco products, and we may not be indemnified for such costs by the tobacco product manufacturers in the future. In addition, even if we continue to be indemnified by cigarette manufacturers that are parties to the MSA, future litigation awards against such cigarette manufacturers could be so large as to lessen or eliminate the ability of the manufacturers to satisfy their indemnification obligations. Our results of operations, business, cash flow, and overall financial condition could be negatively impacted due to increased litigation costs and potential adverse rulings against us.
In our retail health food business, we compete with a wide range of well-financed regional and national competitors such as Whole Foods Markets, Sprouts Farmers Market, Natural Grocers, General Nutrition Centers, Vitamin Shoppe, and other online competitors such as Amazon™ who all have embarked on aggressive expansion strategies. Additionally, we compete with specialty supermarkets, other independent natural foods store chains, small specialty stores, and restaurants. Conventional supermarkets and mass market outlets such as Kroger, Albertsons, Walmart, Trader Joe’s and Costco have also significantly increased their offerings of organic and natural products providing another layer of competition.
In our retail health food business, we compete with a wide range of well-financed regional and national competitors such as Whole Foods Markets, Trader Joe’s, Sprouts Farmers Market, Natural Grocers, General Nutrition Centers, Vitamin Shoppe, and other online competitors such as Amazon™ who all have embarked on aggressive expansion strategies. Additionally, we compete with specialty supermarkets, other independent natural foods store chains, small specialty stores, and restaurants. Conventional supermarkets and mass market outlets such as Kroger, Albertsons, Walmart, and Costco have also significantly increased their offerings of organic and natural products providing another layer of competition. Finally,addition, if online shopping, direct-to-consumer, and home delivery models continue to grow in popularity thereby further disrupting traditional sales channels, it may present a significant direct risk to brick and mortar retailers like the Company. We also face competition from Whole Foods Market and/or its parent company Amazon™, which pose a threat to the supply chains of the grocery and natural foods business as they continue to pursue a vertical, multi-channel sales strategy targeting both retail consumers and business level customers. Most of these competitors may have greater financial and marketing resources than the Company and may be able to devote greater resources to sourcing, promoting, and selling their products. In response to heightened competition, the Company is continuing to implement a repositioning strategy for its retail business. This repositioning strategy calls for a wide range of initiatives including the possible addition of one or more of our new retail store prototypes per year into the foreseeable future. The opening of new retail stores inherently brings additional risk to the business. Further, if our repositioning strategy in response to this increase in competition is not successful, it may have a material adverse effect on our results of operations, business, cash flow, and financial condition, and could potentially result in the impairment of assets within this business segment.
Our results of operations and financial condition are particularly sensitive to changes in the overall economy, including the level of consumer discretionary spending. Consumer discretionary spending may be negatively impacted by inflation, rising interest rates, tariffs and trade restrictions, job losses as a result of increasing automation (AI), recessions or other general economic uncertainties or downturns. Changes in discretionary spending patterns may decrease demand from our convenience store customers and/or impact the demand for natural food products in our retail health food stores as customers purchase less expensive product alternatives.
Additionally, many of our Wholesale Segment customers are thinly capitalized and their access to credit may be impacted by changes in economic conditions, systemic pressures in the banking system, including disruptions in the credit markets, rising interest rates or other factors, which may affect their ability to operate as a going concern, presenting additional credit risk for the Company. A period of economic downturn or economic deterioration could result in lower sales and profitability as well as an increased probability of customer credit defaults.
The Company purchases products from a wide range of vendors in both of its business segments. Some of our vendors may import certain products as part of their manufacturing processes and could be impacted by higher costs resulting from increases or fluctuations in trade tariffs and/or changes to trade policies. Further, the impact of higher costs at the retail level may negatively impact consumer discretionary spending and demand. In the event that our product purchase costs from our vendors increase and we cannot pass on those price increases to our customers, or if the retail level demand for the products we sell decreases, the Company’s results of operations, balance sheet, and cash flows could be negatively impacted.
Our business operations could be negatively impacted by acts of civil unrest or violence, or any restrictions, regulations, or security measures implemented by governmental bodies in response to such acts, which are beyond our control. Such acts or any responsive governmental action could threaten or disrupt our supply chain, may result in property damage and/or insurance claims to the facilities of the Company or our customers, impact the safety of our workforce or the workforces of our customers, and may also have indirect impacts on customer demand for the products we sell, or our ability to collect on accounts receivable or finance our operations.
Both of our operating segments rely on distribution and transportation networks, which includes our drivers, our distribution center employees, and the networks of our suppliers and retail store delivery partners, to deliver products to us and our customers in a timely and cost-effective manner. Any unanticipated or significant disruption or operational failure related to this process could negatively affect our operations or the operations of our retail partners, including but not limited to, our inability, or that of our delivery partners, to hire and/or retain qualified drivers and distribution center employees to meet demand, product shortages, financial or other difficulties of suppliers, cyber-related events, social unrest, inclement weather or other economic conditions.
Any instances of, or reports linking products we sell, related to foodborne illnesses, food tampering, contamination, mislabeling or other food-safety issues could damage the value of our brand and may lead to product liability and personal injury claims, litigation, government investigations and damages. In addition, customer preferences and store traffic could be adversely impacted by food-safety issues, health concerns or negative publicity about the consumption of products we sell, which could damage our reputation and cause a decline in demand for those products and adversely impact our sales. In addition, a failure by any of our suppliers to use quality ingredients and products and/or to comply with applicable food and food-safety laws and industry standards could disrupt our supply chain, damage our reputation and adversely impact our business, financial condition and results of operation.
From time to time, one or both of the Company’s business segments may acquire assets from other businesses, all or a portion of the ownership of another business, or make an equity investment in another business through the purchase of equity or other means. The purchase of assets, of all or a portion of a business, or an equity investment in another business can bring significant risks to the Company in a number of areas including purchase price, amount of equity investment, business valuation and recording risks, customer retention risks, risks associated with the assumption of liabilities or obligations, integration risks, information technology and cybersecurity risks, risks associated with the addition of new employees such as health care costs, and a wide range of other risks and considerations. While the Company strives to minimize the risks associated with its acquisition or equity investment activities, issues may arise which could have a material negative impact on the Company’s results of operations, balance sheet, and cash flows.
The Company purchases products from a wide range of vendors in both of its businesses. Some of our vendors may import certain products as part of their manufacturing processes and could be impacted by higher costs resulting from trade tariffs. Further, the impact of higher costs at the retail level may negatively impact consumer discretionary spending and demand. In the event that our product purchase costs from our vendors increase and we cannot pass on those price increases to our customers, or if the retail level demand for the products we sell decreases, the Company’s results of operations, balance sheet, and cash flows could be negatively impacted.
Our results of operations and financial condition are particularly sensitive to changes in the overall economy, including the level of consumer discretionary spending. Consumer discretionary spending may be negatively impacted by inflation, rising interest rates, recessions or other general economic uncertainties or downturns. Changes in discretionary spending patterns may decrease demand from our convenience store customers and/or impact the demand for natural food products in our retail health food stores as customers purchase less expensive product alternatives.
Additionally, many of our Wholesale Segment customers are thinly capitalized and their access to credit may be impacted by changes in economic conditions, systemic pressures in the banking system, including disruptions in the credit markets, rising interest rates or other factors, which may affect their ability to operate as a going concern, presenting additional credit risk for the Company. A period of economic downturn or economic deterioration could result in lower sales and profitability as well as customer credit defaults.
We rely extensively on our information technology systems and those of third parties to operate our business. We have had and may have disruptions to ourOur information technology systems duemay be subject to damage or interruption from a number of factorsfactors, including but not limited toto, electricity outages, equipment failure, telecommunications failures, security breaches, cyber-attacks, computer viruses, malware or other methods and causes. The rapid evolution and increased adoption of emerging technologies, such as artificial intelligence, may also increase the frequency and magnitude of cyber-attacks. Although we make efforts to maintain the security, integrity and redundancy of our systems and have implemented various measures to manage the risk of system disruptions or failures, there can be no assurance that our efforts and measures will be effective. If any of our information technology systems or those of third parties on which we rely are damaged or made unavailable to us, it could have a material negative impact on our operations and profits.
We are subject to laws, rules and regulations that restrict the collection, use and security of personal information of consumers, employees or others. Regulatory actions seeking to impose significant financial penalties for noncompliance and/or legal actions (including those pursuant to laws providing for private rights of action by consumers) could be brought against the Company in the event that data or consumer information is compromised and/or misused, or from perceived or actual non-compliance with data protection, privacy or artificial intelligence requirements. The rapid evolution and increased adoption of artificial intelligence technologies may intensify these risks. Further, any unauthorized release of personal information could harm our reputation, disrupt our business, cause us to expend significant resources and lead to a loss of consumer confidence resulting in an adverse impact on our business.
In addition, at September 2024,2025, approximately thirty30 of our delivery drivers in our Wholesale Segment are covered by a collective bargaining agreement with a labor organization, which expires in November 2026. Strikes, work stoppages, or other business interruptions could occur if we are unable to renew these agreements on satisfactory terms or enter into new agreements on satisfactory terms, which could impair distribution of our products or result in a loss of sales, which could adversely affect our business, financial position and results of operations. The terms and conditions of existing, renegotiated or new collective bargaining agreements could also increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or to adapt to changing business needs or strategy.
The Company operates in a highly regulated environment and plansconducts basedits onbusiness in accordance with the current structure of government and other regulatory agencies and their related framework ofcurrently oversightin and standards setting.place. We cannot predict how any changes to any of these governmental or regulatory frameworks, or changes in laws, regulations, administrative orders or the interpretation or application of such items, may impact our business. Any changes in the current regulatory environment may change, restrict, or discontinue which products the Company is allowed tomay sell. Additionally, certain products we sell may require reformulation to meet new standards or comply with new regulations or administrative orders. As such, any related product recalls or product reformulations could result in additional record keeping costs, expanded documentation and tracking costs, and expanded or changed product labeling and/or scientific substantiation. Any such changes in our regulatory schemes could disrupt our supply chain and sales and have an adverse impact on our results of operations, business, cash flow, and financial condition.
If the number of owners of record (including direct participants in the Depository Trust Company) of our common stock remains below 300, as was truethe case as of September 30, 2024,2025, our obligation to file reports under the Securities Exchange Act of 1934 could be suspended. IfWhile the Company currently has no intention to cease reporting, if we take advantage of this right we will likely reduce administrative costs of complying with public company rules, but periodic and current information updates about the Company would not be available to investors. In addition, the common stock of the Company would be removed from listing on NYSE American. This would likely impact investors’ ability to trade in our common stock.
Management's Discussion & Analysis (MD&A)
Removed heading “OTHER INCOME — Fiscal 2024 vs. Fiscal 2023”
Removed heading “DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL AND LEASED RIGHT-OF-USE ASSETS”
Removed heading “REVENUE RECOGNITION”
Removed heading “BUSINESS COMBINATIONS”
Removed heading “MANDATORILY REDEEMABLE NON-CONTROLLING INTEREST”
Largest changes
“DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL AND LEASED RIGHT-OF-USE ASSETS”see in full comparison
“When evaluating the potential impairment of non-amortizable indefinite-lived assets and goodwill, the Company first assesses a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, market prices, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. …”see in full comparison
“Long-lived assets consist primarily of property and equipment, leased right-of-use (“ROU”) assets, intangible assets, and goodwill acquired in business combinations. Property and equipment, ROU assets and amortizable identified intangible assets are assigned useful lives ranging from one to 40 years. Indefinite-lived intangible assets and goodwill are not amortized. …”see in full comparison
“Our business continues to be impacted by macroeconomic factors and certain manufacturer supply chain limitations. The cumulative effect of sustained inflation across various consumer product categories has impacted discretionary spending and the related retail level demand for the convenience store customers we serve. These same inflationary pressures have also increased our operating costs, particularly as it relates to labor, equipment, insurance, interest, and the cost of the products we sell.”see in full comparison
“Similar to other retail formats, the convenience retailing sector we service continues to operate in a challenging operating environment, impacted in part by weaker consumer spending. At the same time, the cost structures for wholesale distributors such as our Company have been impacted by the cumulative impact of inflation over a multi-year period. These inflationary pressures have increased operating costs in all areas of our business such as product costs, labor and employee benefits, equipment, and insurance.”see in full comparison
Full comparison: every changed paragraph (61)
Similar to other retail formats, the convenience retailing sector we service continues to operate in a challenging operating environment, impacted in part by weaker consumer spending. At the same time, the cost structures for wholesale distributors such as our Company have been impacted by the cumulative impact of inflation over a multi-year period. These inflationary pressures have increased operating costs in all areas of our business such as product costs, labor and employee benefits, equipment, and insurance.
We continue to monitor the impact that changes in tariff rates may have on our operations. Additionally, we remain focused on proposals from regulatory bodies, including the United States Food and Drug Administration (“FDA”), which is evaluating potential limitations and/or prohibitions on the sale of certain products sold by our Company such as cigarettes (including menthol cigarettes), e-cigarettes, tobacco, and vaping products.
In response to this operating environment, the Company has undertaken a number of strategic initiatives including efforts to optimize its organizational structure, continued investments in higher margin growth categories such as foodservice, and the ongoing development of proprietary technology solutions which help differentiate the Company from its competitors. Additionally, the Company has expanded to targeted geographic regions to accommodate customer growth in those areas. This expanded footprint has also created new business development opportunities for the Company as it is now viewed as a viable alternative to other national distributors.
In this regard, during fiscal 2025, the Company acquired Davis-Jones, Inc. d/b/a Arrowrock Supply (“Arrowrock”), a wholesale distributor based in Boise, Idaho, and also opened a new distribution center in Colorado City, Colorado. AMCON now ranks as the third largest Convenience Distributor in the United States as measured by territory covered. We believe this new, expanded geographic footprint will provide an attractive platform for growth in the coming years.
Our business continues to be impacted by macroeconomic factors and certain manufacturer supply chain limitations. The cumulative effect of sustained inflation across various consumer product categories has impacted discretionary spending and the related retail level demand for the convenience store customers we serve. These same inflationary pressures have also increased our operating costs, particularly as it relates to labor, equipment, insurance, interest, and the cost of the products we sell.
We continue to closely monitor regulatory actions and proposals from federal and state governmental and regulatory bodies, including the United States Food and Drug Administration (“FDA”), which is evaluating the possible prohibition and/or limitations on the sale of certain cigarette, e-cigarette, tobacco, and vaping products, including menthol cigarettes. If such further regulations or further product sale limitations were to be implemented, they may limit the range of products we are able to sell in related product categories and decrease overall consumer demand. Any such changes may negatively impact our revenues, gross margins, and financial results.
During fiscal year 2024, the Company continued to make targeted investments in conjunction with its long-term growth strategy.
The Company purchased and is currently building out a 250,000 square foot distribution facility in Colorado City, Colorado, which will play a central role in the Company’s long-term geographic expansion initiatives. In addition, the Company’s new 175,000 square foot distribution facility located in Springfield, Missouri became fully operational at the end of the fiscal period. This new facility will enhance our foodservice capabilities in that region.
The Company also acquired Burklund Distributors, Inc. (“Burklund”), a wholesale distributor based in East Peoria, Illinois and Richmond Master Distributors, Inc. (“Richmond Master”), a wholesale distributor based in South Bend, Indiana. These acquisitions will expand the Company’s regional footprint and provide customers with an enhanced range of products and services over time.
Lastly, the Company opened a new retail store under the Chamberlin’s Natural Foods banner in Lakewood Ranch, Florida.
Sales in our Wholesale Segment increased $171.6$103.7 million during fiscal 20242025 as compared to fiscal 2023.2024. Significant items impacting sales during fiscal 20242025 included a $103.1$120.8 million increase in comparative sales related to the acquisition of Henry’s Foods, Inc. (“Henry’s") during Q2 2023, a $98.6 million increase in sales related to the combined acquisitions of Burklund and Richmond Master during fiscalQ3 2024, a $116.6$23.2 million increase in sales related to the Arrowrock acquisition during fiscal 2025, a $115.2 million increase in sales related to price increases implemented by cigarette manufacturers, and a $2.9$20.8 million increase in sales related to higherthe salesvolume volumesand mix of products in our tobacco, confectionary, foodservice, and other categories (“Other Products”), partially offset by a $149.6$176.3 million decrease in sales related to the volume and mix of cigarette cartons sold.
Sales in our Retail Segment increased approximately $2.0 million in fiscal 2025 as compared to fiscal 2024. Of this change, approximately $3.1 million related to the combined impact of higher sales volumes in our existing stores and the opening of one new retail store. These increases were partially offset by a $1.1 million decrease related to the closure of three stores between the comparative periods.
Sales in our Retail Segment decreased $0.6 million in fiscal 2024 as compared to fiscal 2023. This change was primarily due to a $5.5 million decrease related to the closure of five stores between the comparative periods, partially offset by a $2.4 million increase related to higher sales volumes in our existing stores, a $2.0 million increase related to the re-opening of our Port Charlotte store that was damaged during Hurricane Ian, and a $0.5 million increase related to the opening of our new Lakewood Ranch store.
Gross profit in our Wholesale Segment increased $11.5$5.0 million during fiscal 20242025 as compared to fiscal 2023.2024. Significant items impacting gross profit during fiscal 20242025 included an $11.9$6.8 million increase in comparative gross profit related to the acquisition of Henry’s in Q2 2023, a $5.1 million increase in gross profit related to the combined acquisitions of Burklund and Richmond Master duringin fiscalQ3 2024, and a $0.1$1.2 million increase in gross profit duerelated to the timingArrowrock acquisition during fiscal 2025, and related benefits of cigarette manufacturer price increases between the comparative periods, partially offset by a $5.3$1.6 million decreaseincrease in gross profit related to the mix of volumes and promotions in our Other Products categorycategory, andpartially offset by a $0.3$3.6 million decrease in gross profit related to the volume and mix of cigarette cartons sold between the comparative periods.periods, and a $1.0 million decrease in gross profit due to the timing and related benefits of cigarette manufacturer price increases. Gross profit in our Retail Segment increased $0.1approximately $0.8 million in fiscal 20242025 as compared to fiscal 2023.2024. This change was primarily related to a $1.0$1.2 million increase in realizedgross marginsprofit related to the combined impact of higher sales in our existing stores, a $0.7 million increase related to the re-opening of our Port Charlotte store that was damaged during Hurricane Ian,stores and a $0.3 million increase related to the opening of ourone new Lakewood Ranchretail store, partially offset by a $1.9$0.4 million decrease in gross profit related to the closure of fivethree stores between the comparative periods.
Our fiscal 20242025 consolidated operating expenses increased $19.5$11.3 million as compared to fiscal 2023.2024. Significant items impacting operating expenses during fiscal 20242025 included a $10.6$6.5 million increase in operating expenses related to the acquisition of Henry’s during Q2 2023, a $4.5 million increase related to the combined acquisitions of Burklund and Richmond Master during fiscalQ3 2024, a $3.2$1.4 million increase related to employeethe compensationArrowrock andacquisition benefitduring costs,fiscal 2025, a $1.3$2.3 million increase in insurance costshealth and other insurance costs, a $0.6$2.3 million increase in other Wholesale Segment operating expenses,costs, and a $0.8 million increase in operating expense costs in our Retail Segment. These increases were partially offset by a $0.7$1.5 million decreasereduction in our Retail Segment operating expenses. The decrease in our Retail Segment was primarily due to a $2.8 million decrease related to the closureCompany’s ofcontingent fiveconsideration stores between the comparative periods, partially offset by an increase of $1.1 million in our existing stores, a $0.5 million increase related to the re-opening of our Port Charlotte store that was damaged during Hurricane Ianliability and a $0.5 million increasereduction in employee compensation and benefit costs. The change in our Retail Segment’s operating costs was primarily related to the opening of ourone new Lakewoodretail Ranchstore store.and higher costs in our existing stores, partially offset by the closure of three stores between the comparative periods.
During fiscal 2025, interest expense was impacted by higher outstanding debt balances related to the acquisitions of Arrowrock in fiscal 2025 and Burklund and Richmond Master in fiscal 2024, substantially offset by lower interest rates in the current period.
Interest expense increased $1.9 million during fiscal 2024 as compared to fiscal 2023, primarily related to higher interest rates, increased capital expenditures, and higher outstanding debt balances in the current year period related to the acquisitions of Burklund and Richmond Master in fiscal 2024 and the acquisition of Henry’s in Q2 2023.
OTHER INCOME — Fiscal 2024 vs. Fiscal 2023
The change in other income was primarily related to differences in the amounts of insurance recoveries between the comparative periods.
The Company primarily finances its operations through three credit facility agreements (a) a facility that is an obligation of AMCON Distributing Company (the “AMCON Facility”), (b) a facility that is an obligation of Team Sledd (“Team Sledd” and, the “Team Sledd Facility”) and (c) a facility that is the obligation of Henry’s (the “Henry’s Facility”), and collectively together (collectively, the “Facilities”) and long-term debt agreements with banks. The Team Sledd Facility and Thethe Henry’s Facility are non- recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company.
At September 2024,2025, the Facilities have a total combined borrowing capacity of $300.0$305.0 million, which includes provisions for up to $30.0 million in credit advances for certain inventory purchases, which are limited by accounts receivable and inventory qualifications, and the value of certain real estate collateral. The Henry’s Facility matures in February 2026, the AMCON Facility matures in June 2027, the Henry’s Facility matures in February 2028, and the Team Sledd Facility matures in March 2028, each without a penalty for prepayment. Obligations under the Facilities are collateralized by substantially all of the Company’s respective equipment, intangibles, inventories, accounts receivable, and certain real estate. The Facilities each feature an unused commitment fee and springing financial covenants. Borrowings under the Facilities bear interest at either the bank’s prime rate or the Secured Overnight Financing Rate (“SOFR”), plus any applicable spreads.
The Team Sledd Facility and Team Sledd’s two notes payable and the Team Sledd Facility contain cross default provisions. The Henry’s note payableFacility and the Henry’s Facilitynote payable also contain cross default provisions. There were no such cross defaults for either Team Sledd or Henry’s at September 2024.2025. Additionally, the Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company. The Company and its subsidiaries, including Team Sledd and Henry’s, were in compliance with all of the financial covenants under the Facilities at September 2024.2025.
The Company paid cash dividends of $0.6 million, or $1.00 per common share, andin $3.5each million, or $5.72 per common share, duringof fiscal 20242025 and fiscal 2023, respectively.2024.
The Company believesutilizes the followingnumerous critical accounting policies reflect the significantpolicies, estimates and assumptions used in the preparation of the Consolidated Financial Statements.Statements, Ourthe criticalmost accountingsignificant estimatesof arewhich is set forth below.
INVENTORIES
NATURE OF ESTIMATES REQUIRED. In our businesses, we carry large quantities and dollar amounts of inventory. Inventories primarily consist of finished products purchased in bulk quantities to be sold to our customers. Given the large quantities and broad range of products we carry, there is a risk that inventory may become impaired because it has become unsaleable or unrefundable, slow moving, obsolete, or because it has been discontinued. The use of estimates is required in determining either the net realizable value (for our wholesale business) or the lower of cost or market (“LCM”) under the retail method (for our retail business) of this inventory.
ASSUMPTIONS AND APPROACH USED. We estimate our inventory obsolescence reserve at each balance sheet date based on the following criteria:
DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL AND LEASED RIGHT-OF-USE ASSETS
Long-lived assets consist primarily of property and equipment, leased right-of-use (“ROU”) assets, intangible assets, and goodwill acquired in business combinations. Property and equipment, ROU assets and amortizable identified intangible assets are assigned useful lives ranging from one to 40 years. Indefinite-lived intangible assets and goodwill are not amortized. Impairment of the Company’s long-lived assets is assessed during the Company’s fourth fiscal quarter using both qualitative and quantitative analysis, or whenever events or circumstances change that indicate the carrying value of such long-lived assets may not be recoverable.
NATURE OF ESTIMATES REQUIRED. Management has to estimate the useful lives of the Company’s long-lived assets. In regard to the Company’s impairment analysis, the most significant assumptions include management’s estimate of the annual growth rate used to project future sales and expenses.
ASSUMPTIONS AND APPROACH USED. For property and equipment, depreciable lives are based on our accounting policy which is intended to mirror the expected useful life of the asset. In determining the estimated useful life of ROU assets and amortizable intangible assets such as customer lists, we rely on our historical experience in addition to estimates of how long certain assets will generate cash flows. If impairment indicators arise, we then evaluate the potential impairment of property and equipment, ROU assets and amortizable identifiable intangible assets using an undiscounted future cash flow approach.
When evaluating the potential impairment of non-amortizable indefinite-lived assets and goodwill, the Company first assesses a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, market prices, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If after completing this assessment, the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative evaluation is performed using the income approach (discounted cash flow method).
A discounted cash flow methodology requires the estimation of a wide range of factors including but not limited to: (i) forecasting future earnings and cash flows (ii) determining the discount rate applicable to the earnings stream being discounted, and (iii) computing a terminal value at some point in the future. These estimations require significant judgment and include making assumptions such as sales growth rates including the addition of new retail stores, future store profitability, planned capital expenditures, our ability to control costs, the successful implementation of initiatives designed to enhance sales and improve inventory management, gross profit estimates, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results.
Goodwill recorded on the Company’s consolidated balance sheet represents amounts allocated to its wholesale reporting unit which totaled $5.8 million at both September 2024 and September 2023. The Company determined that the estimated fair value of its wholesale reporting unit exceeded its carrying value at both September 2024 and September 2023.
INSURANCE
The Company’s insurance for employee-related health care benefits, workers’ compensation, and general liability is provided through high-deductible or self-insured programs. The Company accrues for employee-related health care costs utilizing a claims reserve methodology and prepays insurance carriers for all workers’ compensation and general liability coverage as part of its insurance program. All claims activity and any related reserves are evaluated at the end of each reporting period. Due to the uncertainty involved with claims activity and the realization of claims incurred but unreported, management is required to make estimates of these claims.
ASSUMPTIONS AND APPROACH USED. In order to estimate our reserve for incurred but unreported employee health care claims we consider the following key factors:
INCOME TAXES
The Company accounts for its income taxes by recording taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on provisions of tax law as currently enacted; the effects of future changes in tax laws are not anticipated. Future tax law changes, such as a change in the corporate tax rate, could have a material impact on our financial condition or results of operations.
On a periodic basis, we assess the likelihood that our deferred tax assets will be recovered from future taxable income and establish a related valuation allowance as appropriate. In performing our evaluation, we consider all available evidence, both positive and negative, to determine whether, based on the weight of the evidence, a valuation allowance is needed. Evidence used includes information about our current financial position and our results of operations for the current and preceding years, as well as all currently available information about future years, including our anticipated future performance, the reversal of deferred tax liabilities and tax planning strategies. When appropriate, we record a valuation allowance against deferred tax assets to offset future tax benefits that may not be realized.
ASSUMPTIONS AND APPROACH USED. In determining whether a valuation allowance is appropriate, we consider whether it is more likely than not that all or some portion of our deferred tax assets will not be realized, based in part upon management’s judgments regarding future events.
In making that estimate we consider the following key factors:
REVENUE RECOGNITION
We recognize revenue in both our Wholesale Segment and our Retail Segment when the performance obligation is satisfied, which is the point at which control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods and services. For the majority of our customer arrangements, control transfers to customers at a point-in-time when goods have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods and services transfers to the customer. Sales are shown net of returns, discounts, and sales incentives to customers.
NATURE OF ESTIMATES REQUIRED. We estimate and reserve for anticipated sales discounts. We also estimate and provide a reserve for anticipated sales incentives to customers when earned under established program requirements.
ASSUMPTIONS AND APPROACH USED. We estimate the sales reserves using the following criteria:
Our estimates and assumptions for each of the aforementioned critical accounting estimates have not changed materially during the periods presented, nor are we aware of any reasons that they would be reasonably likely to change in the future.
BUSINESS COMBINATIONS
Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their fair value at the date of acquisition. Determining fair value of identifiable assets acquired, particularly intangibles, and liabilities assumed also requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.
NATURE OF ESTIMATES REQUIRED. We allocate the purchase price of acquired companies to the tangible assets acquired, liabilities assumed, and intangible assets acquired, based on their estimated fair values. The excess of the purchase price over these fair values is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.
ASSUMPTIONS AND APPROACH USED. Critical estimates in valuing certain intangible assets include but are not limited to the projected growth factors, future expected cash flows, discount rates, potential competitive and regulatory environment developments, and changes in the market for the Company’s products and services. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Additionally, estimates associated with the accounting for acquisitions may change as new information becomes available regarding the assets acquired and liabilities assumed.
MANDATORILY REDEEMABLE NON-CONTROLLING INTEREST
Mandatorily redeemable non-controlling interest represents the non-controlling interest in the Company’s strategic investment in Team Sledd.
NATURE OF ESTIMATES REQUIRED. We record the mandatorily redeemable non-controlling interest at fair value. This valuation requires management to make significant estimates and assumptions, especially with respect to the timing of future redemptions and discount rates.
ASSUMPTIONS AND APPROACH USED. Critical estimates in valuing the mandatorily redeemable non-controlling interest include but are not limited to the projected growth factors, future expected cash flows, discount rates, potential competitive and regulatory environment developments, and changes in the market for the Company’s products and services. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Recently Adopted Accounting Pronouncements Adopted
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses requires entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. The Company adopted ASU 2016-13 on October 1, 2023. The adoption of ASU 2016-13 did not have a material effect on the Company’s consolidated financial statements.
Recently Announced Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation. This guidance is effective for fiscal years beginning after December 15, 2023 (fiscal 2025 for the Company), and interim periods within fiscal years beginning after December 15, 2024 (fiscal 2026 for the Company), with early adoption permitted. The Company is currently reviewing thisadopted ASU and its potential impact2023-07 on ourSeptember 30, 2025. The adoption of ASU 2023-07 did not have a material effect on the Company’s consolidated financial statements.
Recent Accounting Pronouncements
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the Company’s risk factors as previously disclosed in Item 1A “Risk Factors” of the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2025.
No wording changes found in this section.
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Management's Discussion & Analysis (MD&A)
New heading “GAIN ON SALES OF REAL ESTATE – Q3 2026 vs. Q3 2025”
New heading “RESULTS OF OPERATIONS – NINE MONTHS ENDED JUNE:”
New heading “SALES – Nine months ended June 2026”
New heading “GROSS PROFIT – Nine months ended June 2026”
New heading “OPERATING EXPENSE – Nine months ended June 2026”
New heading “GAIN ON SALES OF REAL ESTATE – Nine months ended June 2026”
New heading “INTEREST EXPENSE – Nine months ended June 2026”
New heading “INCOME TAX EXPENSE – Nine months ended June 2026”
Removed heading “OPERATING EXPENSE – Q2 2026 vs. Q2 2025”
Removed heading “INTEREST EXPENSE – Q2 2026 vs. Q2 2025”
Removed heading “INCOME TAX EXPENSE – Q2 2026 vs. Q2 2025”
Removed heading “RESULTS OF OPERATIONS – SIX MONTHS ENDED MARCH:”
Removed heading “SALES – Six months ended March 2026”
Removed heading “GROSS PROFIT – Six months ended March 2026”
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Similar to other retail formats, theThe convenience retailingstore retail sector we service continues to operate inface a challenging operating environment, most recently impacted in part by weakerhigher fuel prices, which have decreased consumer spending.discretionary spending on in-store purchases. At the same time, the cost structures for wholesale distributors such as our Company have been impacted by the cumulative impact of inflation over a multi-year period. These inflationary pressures have increased operating costs in all areas of our business such as product costs, fuel, labor and employee benefits, equipment, and insurance.
The Company continues efforts to optimize its real estate footprint. In this regard, during Q3 2026, we sold two smaller distribution facilities located in North Dakota and Illinois for total proceeds of $5.6 million resulting in a total realized gain of approximately $1.8 million.
Certain accounting estimates used in the preparation of the Company’s condensed consolidated unaudited financial statements (“financial statements”) require us to make judgments and estimates and the financial results we report may vary depending on how we make these judgments and estimates. Our critical accounting estimates are set forth in our annual report on Form 10-K for the fiscal year ended September 30, 2025, as filed with the Securities and Exchange Commission. There have been no significant changes with respect to these estimates and related policies during the sixnine months ended MarchJune 2026.
SECONDTHIRD FISCAL QUARTER 2026 (Q2Q3 2026)
The following discussion and analysis includes the Company’s results of operations for the three and sixnine months ended MarchJune 2026 and MarchJune 2025:
During Q3 2026, we sold two smaller distribution facilities located in North Dakota and Illinois for total proceeds of approximately $5.6 million, resulting in a total gain of approximately $1.8 million. During Q2 2026, we purchased a distribution facility in Ohio for $8.0 million using borrowings from the Company’s revolving credit facilities. Our Wholesale Segment now operates 1513 distribution centers located in Colorado, Idaho, Illinois, Indiana, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Tennessee and West Virginia. These distribution centers, combined with cross-dock facilities, include approximately 1.81.7 million square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kellanova, Kraft Heinz, Mars Wrigley, General Mills, Procter and Gamble, Ferrero and other major Consumer Packaged Goods and Foodservice suppliers. We also work closely with our customer base to source private label products on their behalf in a wide variety of categories. In addition, we market our own private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers. However, we do participate in a number of programs with our major vendors to support in-stock positions of our key products.
RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCHJUNE:
Gross profit in our Wholesale Segment increased $0.8 million during Q2 2026 as compared to Q2 2025. Significant items impacting gross profit during Q2 2026 included an increase of $1.1 million related to the volume and mix of cigarette cartons sold between the comparative periods and a $0.1 million increase related to the mix of volumes and promotions in our Other Products category, partially offset by a $0.4 million decrease in gross profit due to the timing and related benefits of cigarette manufacturer price increases. Gross profit in our Retail Segment decreased approximately $0.3 million during Q2 2026 as compared to Q2 2025, primarily due to a decrease in gross profit related to same store sales.
OPERATING EXPENSE – Q2 2026 vs. Q2 2025
Operating expense includes selling, general and administrative expenses and depreciation and amortization. Selling, general, and administrative expenses primarily consist of costs related to our sales, warehouse, delivery and administrative departments, including purchasing and receiving costs, warehousing costs and costs of picking and loading customer orders. Our most significant expenses relate to costs associated with employees, facility and equipment leases, transportation, fuel, and insurance. Our Q2 2026 operating expenses increased $1.3 million as compared to Q2 2025. Significant items impacting operating expenses during Q2 2026 included a $1.3 million increase in other Wholesale Segment operating costs, a $0.4 million increase in allowance for credit losses, and a $0.1 million increase in health and other insurance costs. These increases in operating expenses were partially offset by a $0.5 million decrease related to employee compensation and benefit costs.
INTEREST EXPENSE – Q2 2026 vs. Q2 2025
Interest expense decreased in Q2 2026 as compared to Q2 2025, primarily due to lower interest rates and lower average debt balances in the current period.
INCOME TAX EXPENSE – Q2 2026 vs. Q2 2025
The change in the Q2 2026 income tax rate as compared to Q2 2025 was primarily related to non-deductible expenses in relation to the amount of income (loss) from operations before income tax expense (benefit) and variances in the average effective state income tax rates between the comparative periods.
RESULTS OF OPERATIONS – SIX MONTHS ENDED MARCH:
SALES – Six months ended March 2026
Sales in our Wholesale Segment increased $114.8 million during the six months ended March 2026 as compared to the same prior year period. Significant items impacting sales during the current period included a $60.7 million increase in sales related to price increases implemented by cigarette manufacturers, a $37.5 million increase in sales related to the volume and mix of cigarette cartons sold, and a $16.6 million increase in sales related to the volume and mix of products in our Other Products category. Sales in our Retail Segment increased approximately $0.1 million during the six months ended March 2026 as compared to the same prior year period, primarily due to higher sales volumes in our existing stores.
GROSS PROFIT – Six months ended March 2026
Gross profit in our Wholesale Segment increased $1.8$0.5 million during the six months ended MarchQ3 2026 as compared to theQ3 same prior year period.2025. Significant items impacting gross profit during theQ3 current period2026 included an increase of $1.4$0.6 million related to the mix of volumes and promotions in our Other Products category,category and a $1.0$0.4 million increase in gross profit related to the volume and mix of cigarette cartons sold between the comparative periods, partially offset by a $0.6$0.5 million decrease in gross profit due to the timing and related benefits of cigarette manufacturer price increases. Gross profit in our Retail Segment decreased approximately $0.2$0.3 million during the six months ended MarchQ3 2026 as compared to theQ3 same prior year period,2025, primarily due to a decrease in gross profit related to same store sales.
OPERATING EXPENSE – Six months ended MarchQ3 2026 vs. Q3 2025
Operating expense includes selling, general and administrative expenses and depreciation and amortization. Selling, general, and administrative expenses primarily consist of costs related to our sales, warehouse, delivery and administrative departments, including purchasing and receiving costs, warehousing costs and costs of picking and loading customer orders. Our most significant expenses relate to costs associated with employees, facility and equipment leases, transportation, fuel, and insurance. Our Q3 2026 operating expenses increased $0.6 million as compared to Q3 2025. Significant items impacting operating expenses during Q3 2026 included a $0.9 million increase in fuel costs and a $0.8 million increase in other Wholesale Segment operating costs, partially offset by a $0.6 million decrease in health and other insurance costs and a $0.5 million decrease related to employee compensation and benefit costs.
GAIN ON SALES OF REAL ESTATE – Q3 2026 vs. Q3 2025
Represents the gain recognized during Q3 2026 as a result of the sale of two distribution facilities owned by the Company in North Dakota and Illinois, which generated approximately $5.6 million of total proceeds.
Operating expenses increased $2.2 million during the six months ended March 2026 as compared to the same prior year period. Significant items impacting operating expenses during the current period included the impact of a prior year (Q1 2025) reduction in operating expenses related to a $1.5 million contingent liability fair value adjustment, a $1.6 million increase in other Wholesale Segment operating costs, a $0.2 million increase in allowance for credit losses, and a $0.1 million increase in operating expense costs in our Retail Segment. These increases in operating expenses were partially offset by a $0.8 million decrease in health and other insurance costs and a $0.4 million decrease related to employee compensation and benefit costs. The increase in our Retail Segment was primarily due to an increase in costs associated with our existing stores.
INTEREST EXPENSE – Six months ended MarchQ3 2026 vs. Q3 2025
Interest expense decreased $0.2$0.1 million duringin the six months ended MarchQ3 2026 as compared to theQ3 same prior year period,2025, primarily due to lower interest rates and lower average debt balances in the current period.
INCOME TAX EXPENSE – Six months ended MarchQ3 2026 vs. Q3 2025
The change in the Company’sQ3 effective2026 income tax rate during the six-month period ended March 2026 as compared to theQ3 respective prior year period2025 was primarily related to non-deductible expenses in relation to the amount of income (loss) from operations before income tax expense (benefit) and variances in the average effective state income tax rates between the comparative periods.
RESULTS OF OPERATIONS – NINE MONTHS ENDED JUNE:
SALES – Nine months ended June 2026
Sales in our Wholesale Segment increased $211.2 million during the nine months ended June 2026 as compared to the same prior year period. Significant items impacting sales during the current period included a $96.4 million increase in sales related to price increases implemented by cigarette manufacturers, a $91.7 million increase in sales related to the volume and mix of cigarette cartons sold, and a $23.1 million increase in sales related to the volume and mix of products in our Other Products category. Sales in our Retail Segment decreased approximately $0.5 million during the nine months ended June 2026 as compared to the same prior year period, primarily due to lower sales volumes in our existing stores.
GROSS PROFIT – Nine months ended June 2026
Gross profit in our Wholesale Segment increased $2.3 million during the nine months ended June 2026 as compared to the same prior year period. Significant items impacting gross profit during the current period included an increase of $1.9 million related to the mix of volumes and promotions in our Other Products category, and a $1.1 million increase in gross profit related to the volume and mix of cigarette cartons sold between the comparative periods, partially offset by a $0.7 million decrease in gross profit due to the timing and related benefits of cigarette manufacturer price increases. Gross profit in our Retail Segment decreased approximately $0.5 million during the nine months ended June 2026 as compared to the same prior year period, primarily due to a decrease in gross profit related to same store sales.
OPERATING EXPENSE – Nine months ended June 2026
Operating expenses increased $2.8 million during the nine months ended June 2026 as compared to the same prior year period. Significant items impacting operating expenses during the current period included the impact of a prior year (Q1 2025) reduction in operating expenses related to a $1.5 million contingent liability fair value adjustment, a $2.7 million increase in other Wholesale Segment operating costs and a $0.9 million increase in fuel costs. These increases in operating expenses were partially offset by a $1.4 million decrease in health and other insurance costs and a $0.9 million decrease related to employee compensation and benefit costs.
GAIN ON SALES OF REAL ESTATE – Nine months ended June 2026
Represents the gain recognized during the nine months ended June 2026 as a result of the sale of two distribution facilities owned by the Company in North Dakota and Illinois, which generated approximately $5.6 million of total proceeds.
INTEREST EXPENSE – Nine months ended June 2026
Interest expense decreased $0.3 million during the nine months ended June 2026 as compared to the same prior year period, primarily due to lower interest rates in the current period.
INCOME TAX EXPENSE – Nine months ended June 2026
The change in the Company’s effective income tax rate during the nine-month period ended June 2026 as compared to the respective prior year period was primarily related to non-deductible expenses in relation to the amount of income (loss) from operations before income tax expense (benefit) and variances in the average effective state income tax rates between the comparative periods.
The Company primarily finances its operations through three credit facility agreements (a) a facility that is an obligation of AMCON Distributing Company (the “AMCON Facility”), (b) a facility that is an obligation of Team Sledd, LLC (“Team Sledd” and, the “Team Sledd Facility”) and (c) a facility that is thean obligation of Henry’s (the “Henry’s Facility”) (collectively, the “Facilities”) and long-term debt agreements with banks. The Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company.
At MarchJune 2026, the Facilities had a total combined borrowing capacity of $305.0 million, including provisions for up to $30.0 million in credit advances for certain inventory purchases, which are limited by accounts receivable and inventory qualifications, and the value of certain real estate collateral. The AMCON Facility matures in June 2027, the Henry’s Facility matures in February 2028,2028 and the Team Sledd Facility matures in March 2028,2028. eachSubsequent withoutto June 30, 2026, the Company extended the maturity date of the AMCON Facility to July 2028. None of the Facilities carry a penalty for prepayment. Obligations under the Facilities are collateralized by substantially all of the Company’s respective equipment, intangibles, inventories, accounts receivable, and certain real estate. The Facilities each feature an unused commitment fee and springing financial covenants. Borrowings under the Facilities bear interest at the Secured Overnight Financing Rate (“SOFR”), plus any applicable spreads.
The amount available for use from the Facilities at any given time is subject to a number of factors, including eligible accounts receivable and inventory balances that fluctuate day-to-day, as well as the value of certain real estate collateral. Based on the collateral and loan limits as defined in the Facility agreements, the credit limit of the combined Facilities at March 2026 was $234.9 million, of which $137.1 million was outstanding, leaving $97.8 million available.
Based on the collateral and loan limits as defined in the Facility agreements, the credit limit of the combined Facilities at June 2026 was $243.7 million, of which $160.8 million was outstanding, leaving $82.9 million available.
The average interest rate of the Facilities was 5.07%5.04% at MarchJune 2026. For the sixnine months ended MarchJune 2026, the peak borrowings under the Facilities was $193.2$208.6 million, and the average borrowings and average availability under the Facilities was $154.6$163.0 million and $80.7$77.9 million, respectively.
The Team Sledd Facility and Team Sledd’s two notes payable contain cross default provisions. The Henry’s Facility and the Henry’s note payable also contain cross default provisions. There were no such cross defaults for either Team Sledd or Henry’s at MarchJune 2026. Additionally, the Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company. The Company and its subsidiaries, including Team Sledd and Henry’s, were in compliance with all of the financial covenants under the respective Facilities at MarchJune 2026.
The Company paid cash dividends on its common stock totaling $0.3$0.1 million and $0.4$0.5 million for the three- and six-monthnine-month periods ended MarchJune 2026, respectively, and $0.3$0.1 million and $0.4$0.5 million for the three- and six-monthnine-month periods ended MarchJune 2025, respectively.
DIT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding DIT (13F)
None of the 59 investors we track reported a position in their latest 13F.