Amcon Distributing EPS Drops 13% in Q3

Key Points

• Revenue (GAAP) rose 3.0% to $739.6 million in Q3 fiscal 2025 versus the prior-year period, but operating and net income (GAAP) declined from the prior-year period.

• Gross margin was approximately 6.7%, nearly flat compared to Q3 fiscal 2024, while earnings per share (GAAP) fell 13.4% to $2.13 compared to Q3 fiscal 2024.

• Operating cash flow turned negative year-to-date, and the quarterly dividend was unchanged at $0.18 per share.

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Amcon Distributing (NYSEMKT:DIT), a leading U.S. convenience store distributor, released its fiscal third quarter 2025 earnings on July 18, 2025. For the quarter, diluted EPS (GAAP) was $2.13 and revenue (GAAP) reached $739.6 million. There were no published analyst estimates for this period, so no formal surprise can be assessed. Operating profit margins tightened due to operating cost inflation. Sales were steady compared to Q3 fiscal 2024, but profitability was weaker.

Business Overview and Strategic Context

Amcon Distributing is a wholesale distributor specializing in consumer products for the convenience retail sector. It serves approximately 7,900 retail outlets across its distribution network. The company operates two primary business segments: wholesale distribution and retail health food stores.

The backbone of the business is its wholesale segment, which focuses on distributing tobacco products, food and beverages, and other convenience store essentials. Cigarette sales accounted for approximately 62% of total revenue in both fiscal 2024 and 2023. The retail segment is much smaller, with 15 health food stores. Strategic focus areas recently highlighted include expanding value-added foodservice programs, integrating new acquisitions, and investing in technology systems to improve marketing services and customer retention.

Quarter Highlights and Financial Developments

Gross profit increased 3.5% and revenue rose 3.0% compared to Q3 fiscal 2024. The core wholesale segment delivered the bulk of company revenue, totaling $728.3 million—over 98% of total sales—and reported $7.3 million in operating income. The retail health food segment remained much smaller, with $11.3 million in sales (GAAP) and a slim $0.1 million in operating income, underscoring its limited effect on overall results.

Selling, general and administrative expenses (often called SG&A, which includes wages, benefits, and overhead) rose 6.5% to $42.5 million compared to Q3 fiscal 2024. SG&A expenses increased 6.5%, while revenue rose 3.0% compared to Q3 fiscal 2024. Interest expense (GAAP) was $2.7 million, slightly below $2.9 million in Q3 fiscal 2024. Operating income decreased 13.5% compared to Q3 fiscal 2024. Operating margin (GAAP) was approximately 0.7%.

Management attributed much of the cost increase to inflation, listing higher product costs, wages, and insurance as major factors. In its remarks, the company also pointed to investments in integrating new acquisitions and technology platforms and highlighted its expanded foodservice offerings—aimed at giving convenience store clients a turn-key solution to compete with fast-food restaurants. Proprietary programs for marketing, design, and electronic displays were described as winning "enthusiasm" among its customer base, though these efforts have not yet produced visible gains in margin or operating leverage.

However, nine-month year-to-date cash flow from operations (GAAP) was -$12.5 million. The primary drivers were increased accounts receivable and inventory buildup, alongside a reduction in accounts payable. Shareholders’ equity edged up to $113.2 million (GAAP). Cash on hand was just $0.83 million, while debt and credit facility borrowings increased to $154.6 million. The quarterly dividend held steady at $0.18 per share, unchanged from a year ago.

Outlook and What to Watch Going Forward

The company did not issue any specific financial guidance for upcoming periods in this release. Instead, management reiterated its intentions to pursue further acquisitions, focus on maximizing liquidity, and continue integrating recent deals for operational efficiency. No quantitative forecasts on revenue, profit, or cash flow were provided.

Looking forward, key risks include continued reliance on cigarette sales, which are exposed to regulatory changes and consumption declines, and thin operating margins that could come under further pressure. Cash management and credit availability remain priorities due to inventory and accounts receivable buildup. The quarterly dividend was maintained at $0.18 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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