AMCON DISTRIBUTING CO

AMCON DISTRIBUTING CO Annual Review – Plain English Breakdown

Let’s cut through the noise and see how AMCON really performed this year. No jargon, just the key facts you need to decide if this stock deserves a spot in your portfolio.

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The Short Story: Sales Up, Profits Down

AMCON sells consumer goods (like tobacco, beverages, and groceries) to retailers. This year was a classic case of "more work, less reward":

• Revenue grew 7% to $2.71 billion (up $180 million)
• Profits collapsed 87% to just $568,739 (down from $4.4 million last year)

Think of it like a lemonade stand selling more cups but making pennies because lemons and sugar got expensive.

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Why Profits Crashed

1. Suppliers charged more: Cost of goods rose 6% ($2.63 billion total).
2. Running the business got pricier: Operating costs (salaries, rent, etc.) jumped 7% to $76.1 million.
3. Debt bites: Interest payments doubled to $9.3 million, eating 12% of gross profit (up from 5.6% last year).

The squeeze: For every $100 in sales, AMCON kept:

• $3.00 after product costs (down from $3.22 last year)
• $0.02 in actual profit (down from $0.17 last year)

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Bright Spots vs. Red Flags

✅ They sold more in a tough market: Growing sales during inflation shows some pricing power.
❌ Profit margins evaporated: Costs rose faster than prices, crushing profitability.
❌ Debt is becoming a problem: Interest costs now rival a month’s gross profit.

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Cash Flow Reality Check

With profits this thin, AMCON’s survival depends on:

• Perfect timing of inventory purchases
• Collecting payments from customers faster than they pay suppliers
• No room for error – one bad quarter could tip them into losses

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Biggest Risk: The FDA Sword

61% of AMCON’s sales come from products facing potential FDA bans (menthol cigarettes, vaping). The company didn’t share backup plans if regulations tighten.

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Should You Invest?

Only if you believe:

1. AMCON can raise prices without losing customers
2. They’ll slash costs dramatically in 2024
3. The FDA delays or softens regulations

Avoid if:

• You prefer stable, predictable returns
• Debt-heavy companies make you nervous
• Regulatory risks keep you up at night

Bottom line: High-risk, high-reward play. Treat it like a speculative bet, not a core holding.

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Questions? Drop me a note – happy to help you dig deeper! 👋

Disclosure: This review reflects AMCON’s annual report data. Always do your own research before investing.