AMCON Distributing pany(DIT) - 2025 Q2 - Quarterly Report

Acquisition and Expansion - The Company closed the acquisition of Arrowrock Supply in January 2025, expanding its reach into the Inter-Mountain region of the United States [60]. - The Wholesale Segment serves approximately 7,900 retail outlets and distributes over 20,000 different consumer products, ranking as the third largest convenience store distributor by geographic territory served [72]. Financial Performance - Consolidated sales for Q2 2025 were $619.5 million, a 2.9$601.9 million in Q2 2024 [76]. - Consolidated sales for Q2 2025 were $1,330.8 million, an increase of$83.9 million or 6.7% compared to Q2 2024 [87]. - Gross profit for Q2 2025 was $43.0 million, with a gross profit percentage of 6.9$89.9 million, reflecting a $4.3 million increase or 5.0$461,905, a significant decrease of 86.2% compared to $3.3 million in Q2 2024 [76]. - Net income available to common shareholders for Q2 2025 was a loss of$1.2 million, a decrease of $2.9 million or 177.1$83.4 million to $1,308.3 million in the six months ended March 2025, a 6.8$4.2 million, totaling $81.7 million [91]. Operating Costs and Expenses - The Wholesale Segment sales increased by$16.9 million in Q2 2025, driven by a $5.6 million contribution from the Arrowrock acquisition and a$25.3 million increase from price hikes by cigarette manufacturers [79]. - The Retail Segment sales rose by approximately $0.7 million in Q2 2025, attributed to a new store opening and higher sales volumes [79]. - Operating expenses increased by$3.6 million to $85.8 million in Q2 2025, a rise of 9.4$7.3 million to $85.8 million, driven by acquisitions and operational costs [94]. Economic and Regulatory Environment - The Company is facing inflationary pressures leading to higher operating costs, impacting product costs, labor, and employee benefits [61]. - The Company is closely monitoring proposed tariffs and regulatory actions that could negatively impact revenues and gross margins [62]. - A precipitous change in the operating environment could materially impact the Company's future revenue streams [110]. - The Company may face challenges in collecting on customer accounts receivable or securing bank credit [110]. - There are no applicable quantitative and qualitative disclosures about market risk [111]. Liquidity and Debt - Interest expense for Q2 2025 increased by less than$0.1 million, primarily due to higher debt balances from acquisitions [85]. - The company had a total combined borrowing capacity of $305.0 million as of March 2025, with$142.3 million outstanding [100]. - The average interest rate on the company's facilities was 5.76% at March 2025 [104]. - The Company believes its liquidity position will be adequate to sustain operations in both the short- and long-term [110].