Shares of AMCON Distributing Company (DIT Quick QuoteDIT - Free Report) have declined 7.9% since the company reported its earnings for the quarter ended March 31, 2025. This compares to the S&P 500 index’s 6.8% decline over the same time frame. Over the past month, the stock has decreased 5.7% compared with the S&P 500’s 8.3% decline, reflecting somewhat relative strength amid broader market weakness.

For its fiscal second quarter ended March 31, AMCON incurred a loss per share of $2.58, compared to EPS of 89 cents in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Total sales increased modestly to $619.5 million from $601.9 million a year earlier, representing a 2.9% year-over-year rise. However, despite the topline growth, profitability suffered due to rising costs and margin pressures, as evidenced by a decline in operating income.

The net loss available to common shareholders totaled $1.6 million, a sharp reversal from net income of $0.5 million in the comparable prior-year period.

Segment Performance and Key Business Metrics

The wholesale distribution segment remained the cornerstone of AMCON’s operations, generating $607.6 million in revenues and $2.8 million in operating income. The retail health food segment, though smaller, contributed $11.9 million in revenues and $0.4 million in operating income. Gross profit for the consolidated business came in at $43 million, marginally up from $42.3 million last year, but selling, general and administrative (SG&A) expenses climbed 9.4% to $40.1 million, outpacing revenue growth. Depreciation and amortization also increased 7.4%, weighing further on operating results.

Interest expense remained elevated at $2.3 million, nearly unchanged from the prior year. The company also recognized a $0.3 million increase in the fair value of mandatorily redeemable non-controlling interests, adding to the overall expense burden. Consequently, income from operations before income taxes swung to a loss of $2 million, compared to a $1.2 million profit in the year-ago quarter.

Management Commentary

Chairman and CEO Christopher H. Atayan highlighted the continuing headwinds in the convenience retailing sector, citing lagging discretionary spending and a cumulative inflationary effect on cost structures. He emphasized the company’s strategic focus on integrating acquisitions and new facilities to deliver a robust customer service model. President and COO Andrew C. Plummer noted that AMCON is now the third-largest convenience distributor in the United States by territory, and that its emphasis on proprietary foodservice programs and in-store merchandising gives it a competitive advantage, particularly against quick service restaurants.

Chief financial officer Charles J. Schmaderer reaffirmed the company’s ongoing efforts to manage liquidity and capital allocation. He also spotlighted capital investments in a new 250,000 square foot distribution facility in Colorado City, CO, to support growth in the Intermountain Region.

Factors Influencing Headline Numbers

While revenues grew, several factors contributed to the decline in earnings. Chief among them were higher SG&A expenses due to labor, benefits, insurance, and equipment costs, pressures attributed to prolonged inflation. The company also experienced a reduction in income from operations, which was impacted not only by these operating cost increases but also by non-operating expenses such as interest and fair value adjustments.

Cash used in operating activities came in at $5.4 million, compared to cash generated from operations of $53.8 million a year ago, reflecting greater working capital usage, particularly in inventories.

Other Developments

During the quarter, AMCON acquired Arrowrock Supply, further consolidating its footprint in the convenience distribution sector. The company is channeling capital toward developing the recently acquired Colorado City facility to serve the Intermountain Region, aligning with its growth trajectory.