Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
⌧
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2025
OR
◻
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to _________
Commission File Number 1-15589
(Exact name of registrant as specified in its charter)
Delaware
47-0702918
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
7405 Irvington Road, Omaha NE
68122
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: (402) 331-3727
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 Par Value
DIT
NYSE American
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻
Accelerated filer ◻
Non-accelerated filer ⌧
Smaller reporting company ⌧
Emerging growth company ◻
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ◻ No ⌧
The Registrant had 650,709 shares of its $.01 par value common stock outstanding as of January 16, 2026.
Form 10-Q
1st Quarter
INDEX
December 31, 2025
PAGE
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed consolidated balance sheets at December 31, 2025 (unaudited) and September 30, 2025
3
Condensed consolidated unaudited statements of operations for the three months ended December 31, 2025 and 2024
4
Condensed consolidated unaudited statements of shareholders’ equity for the three months ended December 31, 2025 and 2024
5
Condensed consolidated unaudited statements of cash flows for the three months ended December 31, 2025 and 2024
6
Notes to condensed consolidated unaudited financial statements
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
21
Item 4. Controls and Procedures
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
23
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
24
2
Item 1. Financial Statements
AMCON Distributing Company and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 2025 and September 30, 2025
December
September
2025
(Unaudited)
ASSETS
Current assets:
Cash
$
778,753
744,613
Accounts receivable, less allowance for credit losses of $2.3 million at December 2025 and $2.4 million at September 2025
69,140,693
73,192,069
Inventories, net
144,398,247
153,276,545
Income taxes receivable
—
140,986
Prepaid expenses and other current assets
15,643,754
12,150,645
Total current assets
229,961,447
239,504,858
Property and equipment, net
106,101,670
107,844,655
Operating lease right-of-use assets, net
29,633,198
30,488,841
Goodwill
5,778,325
Other intangible assets, net
4,124,433
4,240,359
Other assets
3,110,244
3,231,488
Total assets
378,709,317
391,088,526
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
48,459,134
69,532,355
Accrued expenses
14,468,462
15,459,406
Accrued wages, salaries and bonuses
3,385,796
6,745,698
Income taxes payable
360,668
Current operating lease liabilities
7,579,283
7,862,117
Current maturities of long-term debt
5,517,971
5,471,310
Current mandatorily redeemable non-controlling interest
7,343,535
7,020,895
Total current liabilities
87,114,849
112,091,781
Credit facilities
140,682,183
126,804,775
Deferred income tax liability, net
3,791,416
4,048,070
Long-term operating lease liabilities
22,240,107
22,845,456
Long-term debt, less current maturities
9,624,864
11,033,949
Other long-term liabilities
1,141,885
1,193,081
Shareholders’ equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized
Common stock, $.01 par value, 3,000,000 shares authorized, 650,709 shares outstanding at December 2025 and 635,609 shares outstanding at September 2025
9,950
9,799
Additional paid-in capital
37,539,841
36,991,031
Retained earnings
108,969,480
108,475,842
Treasury stock at cost
(32,405,258)
Total shareholders’ equity
114,114,013
113,071,414
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.
Condensed Consolidated Unaudited Statements of Operations
for the three months ended December 31, 2025 and 2024
For the three months ended December
2024
Sales (including excise taxes of $143.1 million and $143.4 million, respectively)
730,055,330
711,273,256
Cost of sales
682,007,003
664,379,704
Gross profit
48,048,327
46,893,552
Selling, general and administrative expenses
41,591,659
40,587,630
Depreciation and amortization
2,513,773
2,635,601
44,105,432
43,223,231
Operating income
3,942,895
3,670,321
Other expense (income):
Interest expense
2,661,636
2,846,621
Change in fair value of mandatorily redeemable non-controlling interest
322,640
194,812
Other (income), net
(79,345)
(111,531)
2,904,931
2,929,902
Income from operations before income taxes
1,037,964
740,419
Income tax expense
245,000
392,000
Net income available to common shareholders
792,964
348,419
Basic earnings per share available to common shareholders
1.29
0.57
Diluted earnings per share available to common shareholders
1.28
Basic weighted average shares outstanding
616,788
611,322
Diluted weighted average shares outstanding
618,101
613,573
Dividends paid per common share
0.18
Condensed Consolidated Unaudited Statements of Shareholders’ Equity
Additional
Common Stock
Treasury Stock
Paid-in
Retained
Shares
Amount
Capital
Earnings
Total
THREE MONTHS ENDED DECEMBER 2024
Balance, October 1, 2024
964,945
9,648
(334,583)
(31,272,163)
34,439,735
108,552,565
111,729,785
Dividends on common stock, $0.46 per share
(296,913)
Compensation expense related to equity-based awards
15,100
151
637,711
637,862
Balance, December 31, 2024
980,045
35,077,446
108,604,071
112,419,153
THREE MONTHS ENDED DECEMBER 2025
Balance, October 1, 2025
(344,436)
(299,326)
548,810
548,961
Balance, December 31, 2025
995,145
Condensed Consolidated Unaudited Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income available to common shareholders to net cash flows from (used in) operating activities:
Depreciation
2,397,847
2,501,175
Amortization
115,926
134,426
(Gain) loss on sales of property and equipment
4,869
(840)
Equity-based compensation
Deferred income taxes
(256,654)
69,577
Provision for credit losses
(49,000)
112,746
Inventory allowance
8,538
24,405
Change in fair value of contingent consideration
(1,453,452)
Changes in assets and liabilities:
Accounts receivable
4,100,376
(49,572)
Inventories
8,869,760
(30,293,089)
Prepaid and other current assets
(3,493,109)
668,184
121,244
(190,306)
(21,064,250)
(6,911,400)
Accrued expenses and accrued wages, salaries and bonuses
(4,565,585)
(6,055,070)
(51,196)
71,823
Income taxes payable and receivable
501,654
322,423
Net cash flows from (used in) operating activities
(11,695,015)
(39,867,877)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(678,402)
(3,453,711)
Proceeds from sales of property and equipment
9,700
12,442
Net cash flows from (used in) investing activities
(668,702)
(3,441,269)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities
699,127,269
713,853,301
Repayments under revolving credit facilities
(685,249,861)
(669,224,693)
Principal payments on long-term debt
(1,362,424)
(1,340,204)
Dividends on common stock
(117,127)
(116,184)
Net cash flows from (used in) financing activities
12,397,857
43,172,220
Net change in cash
34,140
(136,926)
Cash, beginning of period
672,788
Cash, end of period
535,862
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of amounts capitalized
2,635,661
2,815,683
Supplemental disclosure of non-cash information:
Equipment acquisitions classified in accounts payable
32,413
772,820
Dividends declared, not paid
182,199
180,729
Notes to Condensed Consolidated Unaudited Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) serves customers in 34 states through two business segments:
WHOLESALE SEGMENT
Our Wholesale Segment is one of the largest wholesale distributors in the United States, serving approximately 8,500 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 20,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery products, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products and institutional foodservice products. We have licenses, and operate, in 34 states, and are the third (3rd) largest convenience store distributor by geographic territory served.
Our Wholesale Segment offers retailers the ability to take advantage of manufacturer- and Company-sponsored sales and marketing programs, merchandising and product category management services, and the use of information systems and data services that are focused on minimizing retailers’ investment in inventory, while seeking to maximize their sales and profits. In addition, our wholesale distribution capabilities provide valuable services to both manufacturers of consumer products and convenience retailers. Manufacturers benefit from our broad retail coverage, inventory management, efficiency in processing small orders, and frequency of deliveries. Convenience retailers benefit from our distribution capabilities by gaining access to a broad product line, inventory optimization and merchandising expertise, information systems, and accessing trade credit.
Our Wholesale Segment operates 14 distribution centers located in Colorado, Idaho, Illinois, Indiana, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Tennessee and West Virginia. These distribution centers, combined with cross-dock facilities, include approximately 1.7 million square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kellanova, Kraft Heinz, Mars Wrigley, General Mills, Procter and Gamble, Ferrero and other major Consumer Packaged Goods and Foodservice suppliers. We also work closely with our customer base to source private label products on their behalf in a wide variety of categories. In addition, we market our own private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers. However, we do participate in a number of programs with our major vendors to support in-stock positions of our key products.
RETAIL SEGMENT
Our Retail Segment, through our Healthy Edge Retail Group subsidiary, is a specialty retailer of natural/organic groceries and operates 15 retail health food stores under the Chamberlin’s Natural Foods, Akin’s Natural Foods, and Earth Origins
Market banners. We operate within the natural products retail industry, which is a subset of the United States grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers. These stores carry over 32,000 different nationally and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise.
FINANCIAL STATEMENTS
The Company’s fiscal year ends on September 30th. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2025, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its consolidated subsidiaries. Additionally, the three-month fiscal periods ended December 31, 2025 and December 31, 2024 have been referred to throughout this Quarterly Report as Q1 2026 and Q1 2025, respectively. The fiscal balance sheet dates as of December 31, 2025 and September 30, 2025 have been referred to as December 2025 and September 2025, respectively.
ACCOUNTING PRONOUNCEMENTS
Recent Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures”, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. This guidance is effective for annual periods beginning after December 15, 2024 (fiscal 2026 for the Company), with early adoption permitted. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures”, which improves disclosure requirements and provides more detailed information about an entity’s expenses, specifically amounts related to purchases of inventory, employee compensation, depreciation, intangible asset amortization, and selling expenses, along with qualitative descriptions of certain other types of expenses. This guidance is effective for fiscal years beginning after December 15, 2026 (fiscal 2028 for the Company), and interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029 for the Company), with early adoption permitted. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.
2. INVENTORIES
Inventories in our Wholesale Segment consisted of finished goods and are stated at the lower of cost or net realizable value, utilizing FIFO and average cost methods. Inventories in our Retail Segment consisted of finished goods and are stated at the lower of cost or market using the retail method. The wholesale distribution and retail health food segment inventories consist of finished products purchased in bulk quantities to be redistributed to the Company’s customers or sold at retail. Finished goods included total reserves of approximately $0.9 million at both December 2025 and September 2025. These reserves include the Company’s obsolescence allowance, which reflects estimated unsalable or non-refundable inventory based upon an evaluation of slow-moving and discontinued products.
3. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill at December 2025 and September 2025 was as follows:
Wholesale Segment
8
Other intangible assets at December 2025 and September 2025 consisted of the following:
Customer lists (Wholesale Segment) (less accumulated amortization of $0.7 million at December 2025 and $0.7 million at September 2025)
2,708,683
2,766,216
Non-competition agreements (Wholesale Segment) (less accumulated amortization of $0.3 million at December 2025 and $0.3 million at September 2025)
39,583
44,333
Tradename (Wholesale Segment) (less accumulated amortization of $0.6 million at December 2025 and $0.6 million at September 2025)
876,167
929,810
Trademarks and tradenames (Retail Segment)
500,000
Goodwill and Retail Segment trademarks and tradenames are considered to have indefinite useful lives and therefore no amortization has been taken on these assets. Goodwill recorded on the Company’s consolidated balance sheets represent amounts allocated to its Wholesale Segment, which totaled approximately $5.8 million at both December 2025 and September 2025. The Company performs its annual impairment testing during the fourth fiscal quarter of each year or as circumstances change or necessitate. There have been no material changes to the Company’s impairment assessments since its fiscal year ended September 2025.
At December 2025, identifiable intangible assets considered to have finite lives were represented by customer lists which are being amortized over 15 years, a non-competition agreement which is being amortized over five years, and a tradename in our Wholesale Segment which is being amortized over seven years. These intangible assets are evaluated for accelerated attrition or amortization adjustments if warranted. Amortization expense related to these assets was approximately $0.1 million for each of the three-month periods ended December 2025 and December 2024.
Estimated future amortization expense related to identifiable intangible assets with finite lives was as follows at December 2025:
Fiscal 2026 (1)
347,777
Fiscal 2027
463,703
Fiscal 2028
451,037
Fiscal 2029
444,703
Fiscal 2030
301,656
Fiscal 2031 and thereafter
1,615,557
3,624,433
4. DIVIDENDS
The Company paid cash dividends on its common stock totaling $0.1 million in each of the three-month periods ended December 2025 and December 2024. During Q1 2026, the Company declared a $0.28 per share special dividend totaling approximately $0.2 million that was included in accrued expenses on the condensed consolidated balance sheet at December 2025 and will be paid in Q2 2026. During Q1 2025, the Company declared a $0.28 per share special dividend totaling approximately $0.2 million that was paid in Q2 2025.
5. EARNINGS PER SHARE
Basic earnings per share available to common shareholders is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding for each period. Diluted earnings per share available to common shareholders is calculated by dividing net income available to common shareholders by the sum of the weighted average number of common shares outstanding and the weighted average dilutive equity awards.
9
Basic
Diluted
Weighted average number of common shares outstanding
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)
1,313
2,251
Weighted average number of shares outstanding
Net earnings per share available to common shareholders
6. DEBT
The Company primarily finances its operations through three credit facility agreements (a) a facility that is an obligation of AMCON Distributing Company (the “AMCON Facility”), (b) a facility that is an obligation of Team Sledd (the “Team Sledd Facility”) and (c) a facility that is an obligation of Henry’s (the “Henry’s Facility” and, collectively, the “Facilities”) and long-term debt agreements with banks. The Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company.
At December 2025, the Facilities had a total combined borrowing capacity of $305.0 million, including provisions for up to $30.0 million in credit advances for certain inventory purchases, which are limited by accounts receivable and inventory qualifications, and the value of certain real estate collateral. The AMCON Facility matures in June 2027, the Henry’s Facility matures in February 2028, and the Team Sledd Facility matures in March 2028, each without a penalty for prepayment. Obligations under the Facilities are collateralized by substantially all of the Company’s respective equipment, intangibles, inventories, accounts receivable, and certain real estate. The Facilities each feature an unused commitment fee and springing financial covenants. Borrowings under the Facilities bear interest at the Secured Overnight Financing Rate (“SOFR”), plus any applicable spreads.
The amount available for use from the Facilities at any given time is subject to a number of factors, including eligible accounts receivable and inventory balances that fluctuate day-to-day, as well as the value of certain real estate collateral. Based on the collateral and loan limits as defined in the Facility agreements, the credit limit of the combined Facilities at December 2025 was $229.4 million, of which $140.7 million was outstanding, leaving $88.7 million available.
The average interest rate of the Facilities was 5.29% at December 2025. For the three months ended December 2025, the peak borrowings under the Facilities was $193.2 million, and the average borrowings and average availability under the Facilities was $163.6 million and $79.2 million, respectively.
Cross Default and Co-Terminus Provisions
The Team Sledd Facility and Team Sledd’s two notes payable contain cross default provisions. The Henry’s Facility and the Henry’s note payable also contain cross default provisions. There were no such cross defaults for either Team Sledd or Henry’s at December 2025. Additionally, the Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company. The Company and its subsidiaries, including Team Sledd and Henry’s, were in compliance with all of the financial covenants under the respective Facilities at December 2025.
Other
The Company has issued letters of credit totaling $3.1 million to its workers’ compensation insurance carriers as part of its self-insured loss control program.
10
7. INCOME TAXES
The change in the Company’s effective income tax rate for the three-month period ended December 2025 as compared to the respective prior year period was primarily related to non-deductible compensation expense in relation to the amount of income from operations before income tax expense and variances in the average effective state income tax rates between the comparative periods.
8. FAIR VALUE DISCLOSURES
Mandatorily Redeemable Non-Controlling Interest
Mandatorily redeemable non-controlling interest (“MRNCI”) recorded on the Company’s condensed consolidated balance sheets represents the fair value of the non-controlling interest in the Company’s strategic investment in Team Sledd. The Company owned approximately 92% of Team Sledd as of both December 2025 and September 2025. The Company has elected to present the MRNCI liability at fair value under FASB Accounting Standards Codification (“ASC”) 825 – Financial Instruments as it believes this best represents the potential future liability and cash flows. As such, the MRNCI balance at December 2025 represents the fair value of the remaining future membership interest redemptions and other amounts due to noncontrolling interest holders through April 2026. The Company calculates the estimated fair value of the MRNCI based on a discounted cash flow valuation technique using the best information available at the reporting date, and records changes in the fair value of the MRNCI as a component of other expense (income) in the condensed consolidated statements of operations. The MRNCI is classified as Level 3 because of the Company’s reliance on unobservable assumptions. The Company estimates the probability and timing of future redemptions and earnings of Team Sledd based on management’s knowledge and assumptions of certain events as of each reporting date, including the timing of any future redemptions and an appropriate discount rate, which was 13.2% at December 2025. At December 2025 and September 2025, the difference between the contractual amount due under the MRNCI and its fair value was approximately $0.2 million and $0.3 million, respectively.
A summary of the MRNCI activity is as follows:
For the Three Months Ended December 31,
Fair value, beginning of period
8,211,500
Redemption of non-controlling interests
Distributions to non-controlling interest
Change in fair value
Fair value, end of period
8,406,312
Contingent Consideration
In April 2024, the Company acquired substantially all of the net operating assets of Burklund Distributors, Inc. (“Burklund”). A portion of the consideration exchanged in the acquisition of Burklund was in the form of contingent consideration, which the Company recorded at fair value as of the acquisition date. At each reporting date, the Company reevaluates whether the achievement of the targets to trigger the minimum payout of any contingent consideration is probable. In Q1 2025, the Company determined that the achievement of the targets to trigger the minimum payout of any contingent consideration was not probable, and adjusted the fair value of its contingent consideration liability and recognized operating income of approximately $1.5 million, which was recorded as a reduction of selling, general and administrative expenses in the condensed consolidated statements of operations. At December 2025, the Company reaffirmed that the achievement of the targets to trigger the minimum payout of any contingent consideration was not probable.
9. EQUITY-BASED INCENTIVE AWARDS
The Company has two equity-based incentive plans, the 2018 Omnibus Incentive Plan and the 2022 Omnibus Incentive Plan (collectively, the “Omnibus Plans”), which provide for equity incentives to employees. Each Omnibus Plan is designed with the intent of encouraging employees to acquire a vested interest in the growth and performance of the Company. The Omnibus Plans together permit the issuance of up to 120,000 shares of the Company’s common stock in the form of stock options, restricted stock awards, restricted stock units, performance share awards as well as awards such
11
as stock appreciation rights, performance units, performance shares, bonus shares, and dividend share awards payable in the form of common stock or cash. The number of shares issuable under the Omnibus Plans is subject to customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Company’s common stock. At December 2025, awards with respect to a total of 98,407 shares, net of forfeitures, have been awarded pursuant to the Omnibus Plans, and awards with respect to another 21,593 shares may be awarded under the Omnibus Plans.
Restricted Stock Awards
At December 2025, the Compensation Committee of the Board of Directors had authorized and approved the following restricted stock awards to members of the Company’s management team pursuant to the provisions of the Company’s Omnibus Plans:
Restricted Stock Awards (1)
Restricted Stock Awards (2)
Restricted Stock Awards (3)
Date of award:
October 2023
October 2024
October 2025
Original number of awards issued:
Service period:
36 months
Estimated fair value of award at grant date:
2,762,000
2,069,000
1,757,000
Non-vested awards outstanding at December 2025:
5,034
10,067
Fair value of non-vested awards at December 2025 of approximately:
558,000
1,115,000
1,673,000
(1)
10,066 of the restricted stock awards were vested as of December 2025. The remaining 5,034 restricted stock awards will vest in October 2026.
(2)
5,033 of the restricted stock awards were vested as of December 2025. 5,033 restricted stock awards will vest in October 2026 and 5,034 will vest in October 2027.
(3)
The 15,100 restricted stock awards will vest in equal amounts in October 2026, October 2027 and October 2028.
There is no direct cost to the recipients of the restricted stock awards, except for any applicable taxes. The restricted stock awards provide that the recipients receive common stock in the Company, subject to certain restrictions, until such time as the awards vest. The recipients of the restricted stock awards are entitled to the customary adjustments in the event of stock splits, stock dividends, and certain other distributions on the Company’s common stock. All cash dividends and/or distributions payable to restricted stock recipients will be held in escrow until all the conditions of vesting have been met. The compensation expense recorded in the Company’s Statement of Operations reflects the straight-line amortized fair value.
The following summarizes restricted stock award activity under the Omnibus Plans during Q1 2026:
Number
Weighted
of
Average
Fair Value
Nonvested restricted stock awards at September 2025
30,201
113.76
Granted
116.37
Vested
(15,100)
116.66
Expired
Nonvested restricted stock awards at December 2025
110.80
Income from operations before income taxes included compensation expense related to the amortization of the Company’s restricted stock awards of approximately $0.5 million and $0.6 million during Q1 2026 and Q1 2025, respectively. Total unamortized compensation expense related to these awards at December 2025 and September 2025 was approximately $3.5 million and $2.3 million, respectively.
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10. BUSINESS SEGMENTS
The Company has two reportable business segments: the wholesale distribution of consumer products (the Wholesale Segment), and the retail sale of health and natural food products (the Retail Segment). The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who utilizes operating income (loss) to evaluate the Company’s business operations and allocate the Company’s resources to these business segments, which are aggregated based on a range of considerations including but not limited to the characteristics of each business, similarities in the nature and type of products sold, customer classes, methods used to sell the products and economic profiles. Included in the “Other” column are intercompany eliminations and assets held and charges incurred and income earned by our holding company.
Wholesale
Retail
Segment
Consolidated
External revenue:
Cigarettes
446,540,356
Tobacco
143,684,672
Confectionery
46,724,565
Health food
10,788,420
Foodservice & other
82,317,317
Total external revenue
719,266,910
675,162,716
6,844,287
34,957,140
3,942,166
2,692,353
2,162,254
235,593
Operating income (loss)
6,868,875
(233,627)
(2,692,353)
Income (loss) from operations before taxes
6,599,173
(207,220)
(5,353,989)
360,118,018
17,233,732
1,357,567
Capital expenditures
575,599
93,833
669,432
438,021,998
135,897,478
44,033,179
10,525,335
82,795,266
700,747,921
657,644,205
6,735,499
34,181,275
3,855,967
2,550,388
2,236,483
264,692
6,551,532
(330,822)
(2,550,389)
6,445,335
(307,907)
(5,397,009)
386,653,248
16,815,247
1,200,775
404,669,270
3,109,807
99,776
3,209,583
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BUSINESS UPDATE
Similar to other retail formats, the convenience retailing sector we service continues to operate in a challenging operating environment, impacted in part by weaker consumer spending. At the same time, the cost structures for wholesale distributors such as our Company have been impacted by the cumulative impact of inflation over a multi-year period. These inflationary pressures have increased operating costs in all areas of our business such as product costs, labor and employee benefits, equipment, and insurance.
We continue to monitor the impact that changes in tariff rates may have on our operations. Additionally, we remain focused on proposals from regulatory bodies, including the United States Food and Drug Administration (“FDA”), which is evaluating potential limitations and/or prohibitions on the sale of certain products sold by our Company such as cigarettes (including menthol cigarettes), e-cigarettes, tobacco, and vaping products.
In response to this operating environment, the Company has made a number of strategic investments to enhance its competitive position over time. These strategic investments include expanding the depth of our foodservice programs and facilities, expansion of our geographic coverage footprint to enhance services for growth-oriented customers, and continued investments in proprietary technology solutions.
Our Company has made a number of forward-looking, targeted investments in recent years (acquisitions, the opening of new distribution centers, etc.) and now ranks as the third largest Convenience Distributor in the United States as measured by territory covered. We believe this geographic footprint will provide an attractive platform for growth in the coming years and positions the Company well with major consumer goods manufacturers who are increasingly relying on large distributors to drive market penetration and operational efficiencies.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections, contains forward-looking statements that are subject to risks and uncertainties and reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. Forward-looking statements include information concerning the possible or assumed future results of operations of the Company and those statements preceded by, followed by or that include the words “future,” “position,” “anticipate(s),” “expect(s),” “believe(s),” “see,” “plan,” “further improve,” “outlook,” “should” or similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions.
It should be understood that the following important factors, in addition to those discussed elsewhere in this document, could affect the future results of the Company and could cause those results to differ materially from those expressed in our forward-looking statements:
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Changes in these factors could result in significantly different results. Consequently, future results may differ from management’s expectations. Moreover, past financial performance should not be considered a reliable indicator of future performance. Any forward-looking statement contained herein is made as of the date of this document. Except as required by law, the Company undertakes no obligation to publicly update or correct any of these forward-looking statements in the future to reflect changed assumptions, the occurrence of material events or changes in future operating results, financial conditions or business over time.
CRITICAL ACCOUNTING ESTIMATES
Certain accounting estimates used in the preparation of the Company’s condensed consolidated unaudited financial statements (“financial statements”) require us to make judgments and estimates and the financial results we report may vary depending on how we make these judgments and estimates. Our critical accounting estimates are set forth in our annual report on Form 10-K for the fiscal year ended September 30, 2025, as filed with the Securities and Exchange Commission. There have been no significant changes with respect to these estimates and related policies during the three months ended December 2025.
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FIRST FISCAL QUARTER 2026 (Q1 2026)
The following discussion and analysis includes the Company’s results of operations for the three months ended December 2025 and December 2024:
Retail Segment
Our Retail Segment, through our Healthy Edge Retail Group subsidiary, is a specialty retailer of natural/organic groceries and operates 15 retail health food stores under the Chamberlin’s Natural Foods, Akin’s Natural Foods, and Earth Origins Market banners. We operate within the natural products retail industry, which is a subset of the United States grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers. These stores carry over 32,000 different nationally and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise.
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RESULTS OF OPERATIONS – THREE MONTHS ENDED DECEMBER:
Incr (Decr)
% Change
CONSOLIDATED:
Sales (1)
18,782,074
2.6
17,627,299
2.7
1,154,775
2.5
Gross profit percentage
6.6
%
Operating expense
882,201
2.0
272,574
7.4
(184,985)
(6.5)
127,828
65.6
(147,000)
(37.5)
444,545
127.6
BUSINESS SEGMENTS:
Sales
18,518,989
44,104,194
43,103,716
1,000,478
2.3
6.1
6.2
263,085
3,944,133
3,789,836
154,297
4.1
36.6
36.0
SALES
Changes in sales are primarily driven by:
SALES – Q1 2026 vs. Q1 2025
Sales in our Wholesale Segment increased $18.5 million during Q1 2026 as compared to Q1 2025. Significant items impacting sales during Q1 2026 included a $29.2 million increase in sales related to price increases implemented by cigarette manufacturers, and a $5.7 million increase in sales related to the volume and mix of products in our tobacco, confectionery, foodservice, and other categories (“Other Products”), partially offset by a $16.4 million decrease in sales related to the volume and mix of cigarette cartons sold. Sales in our Retail Segment increased approximately $0.3 million during Q1 2026 as compared to Q1 2025, primarily due to higher sales volumes in our existing stores.
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GROSS PROFIT – Q1 2026 vs. Q1 2025
Our gross profit does not include fulfillment costs and costs related to the distribution network, which are included in selling, general and administrative costs, and may not be comparable to those of other entities. Some entities may classify such costs as a component of cost of sales. Cost of sales, a component used in determining gross profit, for the wholesale and retail segments includes the cost of products purchased from manufacturers, less incentives we receive which are netted against such costs.
Gross profit in our Wholesale Segment increased $1.0 million during Q1 2026 as compared to Q1 2025. Significant items impacting gross profit during Q1 2026 included an increase of $1.2 million related to the mix of volumes and promotions in our Other Products category, partially offset by a $0.2 million decrease in gross profit due to the timing and related benefits of cigarette manufacturer price increases. Gross profit in our Retail Segment increased approximately $0.2 million during Q1 2026 as compared to Q1 2025, primarily due to an increase in gross profit related to same store sales.
OPERATING EXPENSE – Q1 2026 vs. Q1 2025
Operating expense includes selling, general and administrative expenses and depreciation and amortization. Selling, general, and administrative expenses primarily consist of costs related to our sales, warehouse, delivery and administrative departments, including purchasing and receiving costs, warehousing costs and costs of picking and loading customer orders. Our most significant expenses relate to costs associated with employees, facility and equipment leases, transportation, fuel, and insurance. Our Q1 2026 operating expenses increased $0.9 million as compared to Q1 2025. Significant items impacting operating expenses during Q1 2026 included the impact of a prior year (Q1 2025) reduction in operating expenses related to a $1.5 million contingent liability fair value adjustment, a $0.1 million increase related to employee compensation and benefit costs, a $0.1 million increase in other Wholesale Segment operating costs, and a $0.1 million increase in operating expense costs in our Retail Segment. These increases in operating expenses were partially offset by a $0.9 million decrease in health and other insurance costs. The increase in our Retail Segment was primarily due to an increase in costs associated with our existing stores.
INTEREST EXPENSE – Q1 2026 vs. Q1 2025
Interest expense decreased $0.2 million in Q1 2026 as compared to Q1 2025, primarily due to lower interest rates, partially offset by higher average debt balances in the current period.
INCOME TAX EXPENSE – Q1 2026 vs. Q1 2025
The change in the Q1 2026 income tax rate as compared to Q1 2025 was primarily related to non-deductible compensation expense in relation to the amount of income from operations before income tax expense and variances in the average effective state income tax rates between the comparative periods.
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LIQUIDITY AND CAPITAL RESOURCES
Overview
The Company’s variability in cash flows from operating activities is dependent on the timing of inventory purchases and seasonal fluctuations. For example, periodically we have inventory “buy-in” opportunities which offer more favorable pricing terms. As a result, we may have to hold inventory for a period longer than the payment terms. This generates a cash outflow from operating activities that we expect to reverse in later periods. Additionally, during our peak time of operations in the warm weather months, we generally carry higher amounts of inventory to ensure high fill rates and customer satisfaction.
The Company primarily finances its operations through three credit facility agreements (a) a facility that is an obligation of AMCON Distributing Company (the “AMCON Facility”), (b) a facility that is an obligation of Team Sledd, LLC (“Team Sledd” and, the “Team Sledd Facility”) and (c) a facility that is the obligation of Henry’s (the “Henry’s Facility”) (collectively, the “Facilities”) and long-term debt agreements with banks. The Team Sledd Facility and the Henry’s Facility are non-recourse to AMCON Distributing Company, are not guaranteed by AMCON Distributing Company and have no cross default provisions applicable to AMCON Distributing Company.
Dividend Payments
The Company paid cash dividends on its common stock totaling $0.1 million in each of the three-month periods ended December 2025 and December 2024. During Q1 2026, the Company declared a $0.28 per share special dividend totaling approximately $0.2 million that will be paid in Q2 2026. During Q1 2025, the Company declared a $0.28 per share special dividend totaling approximately $0.2 million that was paid in Q2 2025.
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Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Liquidity Risk
The Company’s liquidity position is significantly influenced by its ability to maintain sufficient levels of working capital. For our Company and our industry in general, customer credit risk and ongoing access to bank credit heavily influence liquidity positions.
The Company does not currently hedge its exposure to interest rate risk or fuel costs. Accordingly, significant price movements in these areas can and do impact the Company’s profitability.
While the Company believes its liquidity position going forward will be adequate to sustain operations in both the short- and long-term, a precipitous change in operating environment could materially impact the Company’s future revenue streams as well as its ability to collect on customer accounts receivable or secure bank credit.
Not applicable.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2025 was made under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control.
The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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None.
There have been no material changes to the Company’s risk factors as previously disclosed in Item 1A “Risk Factors” of the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2025.
The Company issued unregistered securities to certain members of the Company’s management team during the quarterly period ended December 31, 2025, in relation to the vesting and granting of equity awards as described in Note 9 of Part I, Item 1 of this quarterly report on Form 10-Q. These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933.
During the three months ended December 31, 2025, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(a) of Regulation S-K.
(a) Exhibits
10.1
Form of Restricted Stock Award Agreement under the 2018 Omnibus Incentive Plan
10.2
Form of Restricted Stock Award Agreement under the 2022 Omnibus Incentive Plan
31.1
Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, pursuant to section 302 of the Sarbanes-Oxley Act
31.2
Certification by Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary, pursuant to section 302 of the Sarbanes-Oxley Act
32.1
Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished pursuant to section 906 of the Sarbanes-Oxley Act
32.2
Certification by Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary, furnished pursuant to section 906 of the Sarbanes-Oxley Act
101
Inline XBRL Interactive Data File (filed herewith electronically)
104
Cover Page Interactive Data File – formatted in Inline XBRL and included in Exhibit 101
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AMCON DISTRIBUTING COMPANY
(registrant)
Date: January 20, 2026
/s/ Christopher H. Atayan
Christopher H. Atayan,
Chief Executive Officer and Chairman
/s/ Charles J. Schmaderer
Charles J. Schmaderer,
Vice President, Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
25