AMCON Distributing pany(DIT) - 2026 Q1 - Quarterly Report

Financial Performance - The Company reported consolidated sales of $730.1 million for Q1 2026, an increase of 2.6% compared to $711.3 million in Q1 2025[72]. - Gross profit for the Company was $48.0 million, reflecting a 2.5% increase from $46.9 million in the previous year, with a gross profit percentage remaining stable at 6.6%[72]. - Operating income increased by 7.4% to $3.9 million, compared to $3.7 million in Q1 2025[72]. - Net income available to common shareholders surged by 127.6% to $793,000, up from $348,000 in the prior year[72]. Sales Segments - The Wholesale Segment sales increased by $18.5 million to $719.3 million, driven by a $29.2 million increase from cigarette price hikes and a $5.7 million increase from other product categories, despite a $16.4 million decrease in cigarette carton sales[75]. - The Retail Segment sales rose by approximately $0.3 million to $10.8 million, primarily due to higher sales volumes in existing stores[75]. - Gross profit in the Wholesale Segment increased by $1.0 million in Q1 2026 compared to Q1 2025, driven by a $1.2 million increase in the Other Products category, partially offset by a $0.2 million decrease from cigarette manufacturer price increases[78]. Operating Expenses and Costs - Operating expenses rose by $0.9 million in Q1 2026 compared to Q1 2025, influenced by a $1.5 million reduction in the prior year, $0.1 million increases in employee compensation, and other costs, offset by a $0.9 million decrease in health and insurance costs[79]. - The Company continues to face challenges from inflationary pressures affecting operating costs across various business areas, including product costs and labor[57]. Debt and Liquidity - Interest expense decreased by $0.2 million in Q1 2026 due to lower interest rates, despite higher average debt balances[80]. - The total combined borrowing capacity of the Facilities was $305.0 million as of December 2025, with $229.4 million available for use, of which $140.7 million was outstanding[84][85]. - The average interest rate of the Facilities was 5.29% at December 2025, with peak borrowings reaching $193.2 million during the three months ended December 2025[86]. - The liquidity position is significantly influenced by working capital levels and access to bank credit, with no current hedging against interest rate or fuel cost risks[91]. - The Company believes its liquidity position will be adequate for operations, but a significant change in the operating environment could impact future revenue streams[92]. Strategic Initiatives - The Company operates 14 distribution centers across 10 states, covering approximately 1.7 million square feet of permanent floor space[70]. - The Company ranks as the third largest convenience distributor in the U.S. by geographic territory served, enhancing its competitive position through strategic investments[58]. - The Company declared a special dividend of $0.28 per share totaling approximately $0.2 million during Q1 2026, to be paid in Q2 2026[88]. - The Company issued letters of credit totaling $3.1 million to its workers' compensation insurance carriers as part of its self-insured loss control program[89]. - The Company is actively monitoring regulatory changes from the FDA that may impact the sale of certain products, including tobacco and vaping products[56].