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AMCON Distributing pany(DIT) - 2024 Q4 - Annual Report
DITAMCON Distributing pany(DIT)2024-11-08 21:21

Financial Performance - Sales for fiscal 2024 reached 2,711.0million,anincreaseof2,711.0 million, an increase of 171.0 million compared to 2,540.0millioninfiscal2023[148].−Grossprofitforfiscal2024was2,540.0 million in fiscal 2023[148]. - Gross profit for fiscal 2024 was 182.4 million, maintaining a gross profit percentage of 6.7%[148]. - Operating income decreased to 18.0millioninfiscal2024from18.0 million in fiscal 2024 from 26.0 million in fiscal 2023, reflecting a decline in operating income margin from 1.0% to 0.7%[147]. - Net income available to common shareholders fell to 4,336,489infiscalyear2024,down62.74,336,489 in fiscal year 2024, down 62.7% from 11,596,393 in fiscal year 2023[225]. - Basic earnings per share decreased to 7.24infiscalyear2024from7.24 in fiscal year 2024 from 19.85 in fiscal year 2023, a decline of 63.5%[225]. - Total sales for fiscal year 2024 reached 2,710,981,108,anincreaseof6.72,710,981,108, an increase of 6.7% compared to 2,539,994,999 in fiscal year 2023[225]. - Operating income decreased to 17,980,514infiscalyear2024from17,980,514 in fiscal year 2024 from 25,966,583 in fiscal year 2023, indicating a decline of 30.7%[225]. - The company reported a loss from operations before taxes of 7,462,489forfiscalyear2024,adeclinefromaprofitof7,462,489 for fiscal year 2024, a decline from a profit of 17,302,393 in fiscal year 2023[328][329]. Acquisitions and Investments - The company acquired Burklund Distributors, Inc. and Richmond Master Distributors, Inc., contributing to a 98.6millionincreaseinsalesfromtheseacquisitions[151].−TheCompanyacquiredBurklundDistributors,Inc.forapproximately98.6 million increase in sales from these acquisitions[151]. - The Company acquired Burklund Distributors, Inc. for approximately 20.9 million, consisting of 15.4millionincashanda15.4 million in cash and a 3.9 million promissory note[273]. - The Company acquired Richmond Master Distributors, Inc. for approximately 6.6millionincash,assumingoperatingliabilitiesofabout6.6 million in cash, assuming operating liabilities of about 0.6 million[274]. - The acquisition of Burklund aligns with the Company's long-term growth strategy by expanding its regional footprint[273]. - The total consideration paid for the acquisition of Burklund and Richmond Master was 27,573,880,withcashpaymentsof27,573,880, with cash payments of 22,095,436[276]. - The acquisition of Henry's Foods, Inc. involved a cash payment of approximately 54.9millionandtheassumptionofoperatingliabilitiestotalingapproximately54.9 million and the assumption of operating liabilities totaling approximately 1.2 million[281]. - Total identifiable net assets acquired from Henry's Foods amounted to 54,364,928,includingaccountsreceivableof54,364,928, including accounts receivable of 8,237,652 and inventories of 16,060,965[283].−TheproformarevenuefortheyearendedSeptember2024,assumingtheacquisitionsofBurklund,RichmondMaster,andHenry′s,isprojectedtobe16,060,965[283]. - The pro forma revenue for the year ended September 2024, assuming the acquisitions of Burklund, Richmond Master, and Henry's, is projected to be 2,854,752,348[286]. Financial Position and Liquidity - The total combined borrowing capacity of the company's credit facilities is 300.0million,with300.0 million, with 121.3 million outstanding as of September 2024[164]. - The average interest rate on the company's credit facilities was 6.82% at September 2024, with peak borrowings reaching 181.8millionduringfiscal2024[165].−TheCompanybelievesitsliquiditypositionwillbeadequateforoperations,butasignificantchangeintheoperatingenvironmentcouldimpactfuturerevenuestreams[171].−TheCompanyhasnooff−balancesheetarrangements,indicatingastraightforwardfinancialstructure[169].−TheCompany’sliquiditypositionisinfluencedbycustomercreditriskandaccesstobankcredit,withnocurrenthedgingagainstinterestrateorfuelcostrisks[170].−Totalcurrentassetsdecreasedto181.8 million during fiscal 2024[165]. - The Company believes its liquidity position will be adequate for operations, but a significant change in the operating environment could impact future revenue streams[171]. - The Company has no off-balance sheet arrangements, indicating a straightforward financial structure[169]. - The Company’s liquidity position is influenced by customer credit risk and access to bank credit, with no current hedging against interest rate or fuel cost risks[170]. - Total current assets decreased to 229,065,271 in September 2024 from 245,670,707inSeptember2023,areductionof6.8245,670,707 in September 2023, a reduction of 6.8%[222]. - Total liabilities increased to 262,377,525 in September 2024 from 259,260,106inSeptember2023,reflectingariseof1.1259,260,106 in September 2023, reflecting a rise of 1.1%[222]. - Shareholders' equity increased to 111,729,785 in September 2024 from 104,169,094inSeptember2023,anincreaseof7.2104,169,094 in September 2023, an increase of 7.2%[222]. Operational Costs and Expenses - Operating expenses increased by 19.5 million in fiscal 2024, driven by higher costs associated with acquisitions and employee compensation[156]. - Interest expense rose by 1.9millioninfiscal2024,primarilyduetohigherinterestratesandincreaseddebtfromacquisitions[157].−Cashpaidforinterestduringtheperiodwas1.9 million in fiscal 2024, primarily due to higher interest rates and increased debt from acquisitions[157]. - Cash paid for interest during the period was 9,985,313, compared to 8,311,375inthepreviousyear,reflectinganincreaseofapproximately20.18,311,375 in the previous year, reflecting an increase of approximately 20.1%[231]. - The Company made matching contributions to its profit-sharing plans of approximately 2.0 million in fiscal 2024, up from 1.6millioninfiscal2023[317].RevenueRecognitionandAccountingStandards−TheCompanyrecognizesrevenueswhentheperformanceobligationissatisfied,reflectingtheconsiderationexpectedtobereceived[217].−Theoccurrenceandcutoffofrevenuetransactionswereidentifiedasacriticalauditmatterduetothesignificanceofnetsales[218].−TheCompanyadoptedASU2016−13onOctober1,2023,whichintroducedaforward−lookingapproachtoestimatecreditlosses,withnomaterialeffectonconsolidatedfinancialstatements[202].−TheCompanyisreviewingASUNo.2023−07,whichimprovessegmentreportingdisclosures,effectiveforfiscal2025[203].−ThenewFASBASUNo.2023−09willenhanceincometaxdisclosures,effectiveforannualperiodsbeginningafterDecember15,2024[204].−TheCompanyiscurrentlyreviewingthepotentialimpactofthenewASUonitsconsolidatedfinancialstatements[204].RisksandChallenges−Risksassociatedwithhigherinterestratescouldimpactdemand,customercreditrisk,profitability,andcashflows[207].−TheCompanyfacesrisksfromsupplychaindisruptionsandanintenselycompetitivelabormarket,leadingtoincreasedoperationalcosts[208].−TheCompanyissubjecttorisksrelatedtotheacquisitionofbusinessesorassets,includingintegrationchallengesandvendorretention[206].−TheCompanyreportedthatchangesintradetariffsmayresultinhigherpricesforproducts,affectingconsumerdemand[208].AssetManagement−Goodwillonthebalancesheetwasrecordedat1.6 million in fiscal 2023[317]. Revenue Recognition and Accounting Standards - The Company recognizes revenues when the performance obligation is satisfied, reflecting the consideration expected to be received[217]. - The occurrence and cutoff of revenue transactions were identified as a critical audit matter due to the significance of net sales[218]. - The Company adopted ASU 2016-13 on October 1, 2023, which introduced a forward-looking approach to estimate credit losses, with no material effect on consolidated financial statements[202]. - The Company is reviewing ASU No. 2023-07, which improves segment reporting disclosures, effective for fiscal 2025[203]. - The new FASB ASU No. 2023-09 will enhance income tax disclosures, effective for annual periods beginning after December 15, 2024[204]. - The Company is currently reviewing the potential impact of the new ASU on its consolidated financial statements[204]. Risks and Challenges - Risks associated with higher interest rates could impact demand, customer credit risk, profitability, and cash flows[207]. - The Company faces risks from supply chain disruptions and an intensely competitive labor market, leading to increased operational costs[208]. - The Company is subject to risks related to the acquisition of businesses or assets, including integration challenges and vendor retention[206]. - The Company reported that changes in trade tariffs may result in higher prices for products, affecting consumer demand[208]. Asset Management - Goodwill on the balance sheet was recorded at 5.8 million as of September 2024, with the estimated fair value of the wholesale reporting unit exceeding its carrying value[185]. - The Company performs annual goodwill and intangible asset impairment assessments during the fourth fiscal quarter[247]. - Goodwill and intangible assets with indefinite useful lives are not amortized but reviewed for impairment annually[247]. - The Company utilizes a discounted cash flow methodology for impairment testing, requiring significant judgment in estimating future cash flows[249]. - The total net deferred tax assets increased from 2,431,995inSeptember2023to2,431,995 in September 2023 to 3,317,504 in September 2024, indicating a significant rise in deferred tax assets[311].