
Core Viewpoint - AMCON Distributing Company reported a significant decline in earnings for the fiscal second quarter, with a loss per share of $2.58 compared to a profit of 89 cents in the same quarter last year, despite a modest increase in total sales to $619.5 million, reflecting ongoing challenges in profitability due to rising costs and margin pressures [2][3]. Financial Performance - The company's total sales increased by 2.9% year-over-year, from $601.9 million to $619.5 million [2]. - The net loss available to common shareholders was $1.6 million, a sharp decline from a net income of $0.5 million in the prior-year period [3]. - Operating income decreased significantly, with income from operations before income taxes swinging to a loss of $2 million compared to a profit of $1.2 million in the previous year [5]. Segment Performance - The wholesale distribution segment generated $607.6 million in revenues and $2.8 million in operating income, while the retail health food segment contributed $11.9 million in revenues and $0.4 million in operating income [4]. - Gross profit for the consolidated business was $43 million, slightly up from $42.3 million last year, but SG&A expenses rose by 9.4% to $40.1 million, outpacing revenue growth [4]. Cost and Expense Analysis - Interest expense remained high at $2.3 million, nearly unchanged from the prior year, and the company recognized a $0.3 million increase in the fair value of mandatorily redeemable non-controlling interests [5]. - Cash used in operating activities was $5.4 million, a significant decrease from cash generated from operations of $53.8 million a year ago, indicating greater working capital usage, particularly in inventories [9]. Management Insights - The CEO highlighted ongoing challenges in the convenience retailing sector, including lagging discretionary spending and cumulative inflationary effects on costs [6]. - The company is focusing on integrating acquisitions and enhancing customer service, positioning itself as the third-largest convenience distributor in the U.S. by territory [6]. Strategic Developments - AMCON acquired Arrowrock Supply during the quarter, further consolidating its position in the convenience distribution sector [11]. - The company is investing in a new 250,000 square foot distribution facility in Colorado City, CO, to support growth in the Intermountain Region [7].