AMCON's Q1 EPS Drops Y/Y Amid Rising Costs, Shares Down 5%

Core Insights - AMCON Distributing Company's shares have declined 4.6% since the earnings report for the quarter ended December 31, 2024, contrasting with a 0.9% growth in the S&P 500 index during the same period [1] - The company reported earnings per share (EPS) of 57 cents, down from $1.78 a year earlier, while net sales increased by 10.3$711.3 million [2] - Net income available to common shareholders fell by 67.5% to $0.4 million, primarily due to higher interest expenses and increased operating costs [3] Financial Performance - Revenue growth was driven by increased sales volume across product categories, including beverages, tobacco, and foodservice offerings, with excise taxes included in sales rising to$143.4 million from $138.1 million year-over-year [4] - Gross profit improved by 8.3$46.9 million, but gross margin slightly contracted to 6.6% from 6.7% in the prior-year period [5] - Operating expenses surged by 9.5% year-over-year to $43.2 million, while interest expenses rose by 23.1$2.9 million [5] Balance Sheet Analysis - As of December 31, 2024, shareholders' equity increased to $112.4 million from$111.7 million at the end of September 2024, while cash decreased to $0.5 million from$0.7 million [6] - Inventory levels rose significantly to $174.5 million from$144.3 million, indicating higher working capital requirements [6] Strategic Initiatives - Management emphasized a commitment to supporting retail partners with advanced logistics and innovative foodservice solutions, particularly during challenging weather conditions [7] - The strategic importance of Henry's Foods, a subsidiary specializing in proprietary foodservice programs, was highlighted, with enhancements in advertising and electronic display offerings [8] Acquisition and Growth Plans - AMCON completed the acquisition of Arrowrock Supply, a distributor based in Boise, Idaho, which is expected to strengthen its footprint in the Intermountain Region [9] - The company is investing in a new 250,000-square-foot distribution facility in Colorado City, CO, to support growth initiatives [9] Liquidity and Credit Management - AMCON continues to prioritize liquidity and balance sheet management, with borrowing under revolving credit facilities increasing to $165.9 million from$121.3 million at the end of September 2024 [10]