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What changed in AMCON DISTRIBUTING CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMCON DISTRIBUTING CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+163 added−159 removedSource: 10-K (2024-11-08) vs 10-K (2023-11-08)

Top changes in AMCON DISTRIBUTING CO's 2024 10-K

163 paragraphs added · 159 removed · 141 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changePRINCIPAL PRODUCTS The sales of cigarettes represented approximately 62% and 66% of our consolidated revenue in fiscal 2023 and fiscal 2022, respectively. Sales of candy, beverages, foodservice, groceries, health food products, paper products, health and beauty care products, and tobacco products represented approximately 38% and 34% of our consolidated revenue in fiscal 2023 and fiscal 2022, respectively.
Biggest changeSales of candy, beverages, foodservice, groceries, health food products, paper products, health and beauty care products, and tobacco products represented approximately 38% of our consolidated revenue in both fiscal 2024 and fiscal 2023. INFORMATION ON SEGMENTS Information about our segments is presented in Note 13 to the Consolidated Financial Statements included in this Annual Report.
COMPETITIVE STRENGTHS We believe that we benefit from a number of competitive strengths, including the following: Industry Experience The management teams for both of our business segments include substantial depth in the areas of finance, information technology, business development, retail store support, logistics, sales, and marketing.
COMPETITIVE STRENGTHS We believe that we benefit from a number of competitive strengths, including the following: Industry Experience The management teams for both of our business segments possess substantial depth of experience in the areas of finance, information technology, business development, retail store support, logistics, sales, and marketing.
The Company operates in 31 states and is subject to state regulations related to the distribution and sale of cigarettes and tobacco products, generally in the form of licensing and bonding requirements. Additionally, both state and federal regulatory agencies have the ability to impose excise taxes on cigarette and tobacco products.
The Company operates in 33 states and is subject to state regulations related to the distribution and sale of cigarettes and tobacco products, generally in the form of licensing and bonding requirements. Additionally, both state and federal regulatory agencies have the ability to impose excise taxes on cigarette and tobacco products.
These stores carry over 36,000 different national 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.
These stores carry over 32,000 different national 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.
The warm weather months generally fall within the Company’s third and fourth fiscal quarters. Our retail health food business does not generally experience significant seasonal fluctuations in its business. GOVERNMENT REGULATION AMCON is subject to regulation by federal, state and local governmental agencies, including but not limited to the U.S. Department of Agriculture (“USDA”), the U.S.
The warm weather months generally fall 5 Table of Contents within the Company’s third and fourth fiscal quarters. Our retail health food business does not generally experience significant seasonal fluctuations in its business. GOVERNMENT REGULATION AMCON is subject to regulation by federal, state and local governmental agencies, including but not limited to the U.S. Department of Agriculture (“USDA”), the U.S.
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 nine distribution centers located in Illinois, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Tennessee and West Virginia.
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 13 distribution centers located in Colorado, Illinois, Indiana, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Tennessee and West Virginia.
We face competition from a variety of sales channels including local, regional, and national retailers, specialty supermarkets, membership clubs, farmers markets, other natural foods stores, and internet and/or digital direct-to-consumer retailers, each of which competes with us on the basis of product selection, quality, customer service, and price. The natural food retail industry is highly fragmented.
We face competition from a variety of sales channels including local, regional, and national retailers, specialty supermarkets, membership clubs, farmers markets, other natural foods stores, and internet and/or digital direct-to-consumer retailers, each of which competes with us on the basis of product selection, quality, customer service, and price.
We serve customers in 31 states and primarily operate in the Central, Rocky Mountain, Mid-South and Mid-Atlantic regions of the United States. ​ ● Our retail health food segment (“Retail Segment”) operates 17 health food retail stores located throughout the Midwest and Florida. ​ WHOLESALE SEGMENT Our Wholesale Segment is one of the largest wholesale distributors in the United States serving approximately 7,000 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops.
We serve customers primarily in the Central, Rocky Mountain, Great Lakes, Mid-South and Mid-Atlantic regions of the United States. ​ ● Our retail health food segment (the “Retail Segment”) operates 15 health food retail stores located throughout the Midwest and Florida. ​ WHOLESALE SEGMENT Our Wholesale Segment is one of the largest wholesale distributors in the United States serving approximately 7,900 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. Convenience stores represent our largest customer category.
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.
These distribution centers, combined with cross-dock facilities, include approximately 1.3 million square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kellogg’s, Kraft Heinz, and Mars Wrigley. We also market private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers.
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, and Mars Wrigley. We also market private label lines of water, candy products, batteries, and other products.
As the sixth (6th) largest convenience store distributor in the United States based on annual sales (according to Convenience Store News), our wholesale distribution business has sufficient economies of scale to offer competitive pricing as compared to national wholesalers.
As the third (3 rd ) largest convenience store distributor in the United States based on geographic territory served and the sixth (6 th ) largest in annual sales (according to Convenience Store News), our wholesale distribution business has sufficient economies of scale to offer competitive pricing as compared to national wholesalers.
Please note that any internet addresses provided in this report are for information purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such internet addresses is intended or deemed to be incorporated by reference herein. The SEC also maintains a website at www.sec.gov which contains reports, proxies and other company information. ​
Please note that any internet addresses provided in this report are for information purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such internet addresses is intended or deemed to be incorporated by reference herein.
There are, however, a number of both national and regional wholesale distributors operating in the same geographical regions as our Company, resulting in a highly competitive marketplace. Our principal competitors are national wholesalers such as McLane Co., Inc. (Temple, Texas) and Performance Food Group (Richmond, Virginia), as well as regional wholesalers such as H.T.
COMPETITION—Wholesale Segment Our Wholesale Segment has a significant presence in the regions in which we operate. There are, however, a number of both national and regional wholesale distributors operating in the same geographical regions as our Company, resulting in a highly competitive marketplace. Our principal competitors are national wholesalers such as McLane Co., Inc.
Hackney Company (Knoxville, Tennessee) and Imperial Super Regional Distributors (Elmwood, Louisiana) along with a host of smaller grocery and tobacco wholesalers.
(Temple, Texas) and Performance Food Group (Richmond, Virginia), as well as regional wholesalers such as H.T. Hackney Company (Knoxville, Tennessee) and Imperial Super Regional Distributors (Elmwood, Louisiana) along with a host of smaller grocery and tobacco wholesalers.
A new labor agreement has been ratified by the IAMAW through November 2026. We expect this agreement to be executed during the Company’s first quarter of fiscal 2024. CORPORATE AND AVAILABLE INFORMATION The Company’s principal executive offices are located at 7405 Irvington Road, Omaha, Nebraska 68122. The telephone number at that address is 402-331-3727 and our website address is www.amcon.com.
The current labor agreement with the union is effective through November 2026. CORPORATE AND AVAILABLE INFORMATION The Company’s principal executive offices are located at 7405 Irvington Road, Omaha, Nebraska 68122. The telephone number at that address is 402-331-3727 and our website address is www.amcon.com.
Our strategic objectives are: ● Maximizing liquidity and generating cash flow from operations in the short term. ● Developing new customer-focused technology applications, expanding our foodservice platform, and investing in our infrastructure in the medium term. ● Growing both organically and through acquisitions, and expanding our geographic footprint in the long term.
Our strategic objectives are: ● Maximizing liquidity and generating cash flow from operations in the short term. ● Developing new customer-focused technology applications, expanding our foodservice platform, and investing in our infrastructure in the medium term. ● Growing both organically and through acquisitions, and expanding our geographic footprint in the long term. 4 Table of Contents To execute this strategy, our Company has rigorous operational processes in place designed to control costs, manage credit risk, monitor inventory levels, and maintain maximum liquidity.
Additionally, we believe our flexible distribution and support model allows us to provide a high level of service and customized merchandising solutions. 5 Table of Contents COMPETITION—Retail Segment Natural food and supplement retailing is an intensely competitive business.
Our ability to service multiple territories of larger customers, combined with our flexible distribution and support model, enables us to provide the highest level of service and customized merchandising solutions within our industry. COMPETITION—Retail Segment Natural food and supplement retailing is an intensely competitive business.
In December 2022, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.
We have licenses, and operate, in 33 states, are the third (3 rd ) largest convenience store distributor by geographic territory served, and in December 2023, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.
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. Our Retail Segment operates 17 retail health food stores as Chamberlin’s Natural Foods, Akin’s Natural Foods, and Earth Origins Market.
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.
We also face competition from Amazon TM and other online competitors which continue to pursue vertical, multi-channel sales strategies targeting both retail consumers and business level customers. We also compete with specialty supermarkets, other independent natural foods store chains, small specialty stores, and restaurants.
These competitors include companies such as Whole Foods Market, Sprouts Farmers Market, Natural Grocers, General Nutrition Centers and Vitamin Shoppe. We also face competition from Amazon TM and other online competitors which continue to pursue vertical, multi-channel sales strategies targeting both retail consumers and business level customers.
The costs and effect on the Company to comply with state and federal environmental regulations were not significant during either fiscal 2023 or fiscal 2022. 6 Table of Contents EMPLOYEES At September 2023, the Company had 1,276 full-time and 200 part-time employees, which together serve in the following areas: ​ ​ ​ Managerial 78 Administrative 146 Delivery 290 Sales & Marketing 426 Warehouse 536 Total Employees 1,476 Approximately thirty of our wholesale delivery employees in our Quincy, Illinois distribution center are represented by the International Association of Machinists and Aerospace Workers (“IAMAW”).
EMPLOYEES At September 2024, the Company had 1,362 full-time and 201 part-time employees, which together serve in the following areas: ​ ​ ​ Managerial 65 Administrative 178 Delivery 308 Sales & Marketing 441 Warehouse 571 Total Employees 1,563 Approximately thirty of our wholesale delivery employees in our Quincy, Illinois distribution center are represented by the International Association of Machinists and Aerospace Workers (“IAMAW”).
The breadth of our product offerings, combined with highly trained and knowledgeable in-store associates, has created a loyal customer following where our stores are sought out destinations, providing a personalized shopping experience. 4 Table of Contents BUSINESS STRATEGY Our business strategy focuses on short, medium, and long-term objectives designed to create shareholder value.
Broad Product Selection Our retail health foods business prides itself in carrying a broad and superior-quality selection of organic and natural food products and vitamin supplements. The breadth of our product offerings, combined with highly trained and knowledgeable in-store associates, has created a loyal customer following where our stores are sought out destinations, providing a personalized shopping experience.
BUSINES S COMPANY OVERVIEW AMCON Distributing Company was incorporated in Delaware in 1986 and our common stock is listed on NYSE American under the symbol “DIT.” The Company operates two business segments: ● Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products and provides a full range of programs and services to our customers that are focused on helping them manage their business and increase their profitability.
ITEM 1. BUSINES S COMPANY OVERVIEW AMCON Distributing Company was incorporated in Delaware in 1986 and our common stock is listed on NYSE American under the symbol “DIT.” The Company serves customers in 33 states through two business segments: ● Our wholesale distribution segment (the “Wholesale Segment”), which includes our Team Sledd, LLC (“Team Sledd”) and Henry’s Foods, Inc.
To execute this strategy, our Company has rigorous operational processes in place designed to control costs, manage credit risk, monitor inventory levels, and maintain maximum liquidity. The success of our strategy, however, is ultimately dependent on our ability to provide superior service, develop leading edge technologies, and maintain an exceptional array of product offerings.
The success of our strategy, however, is ultimately dependent on our ability to provide superior service, develop leading edge technologies, and maintain an exceptional array of product offerings. PRINCIPAL PRODUCTS The sales of cigarettes represented approximately 62% of our consolidated revenue in both fiscal 2024 and fiscal 2023.
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On February 3, 2023, we closed on our acquisition of Henry’s Foods, Inc. (“Henry’s”), purchasing substantially all of Henry’s operating assets for approximately $54.9 million in cash. Henry’s is a wholesale distributor to convenience stores and other retail formats operating in Minnesota, North Dakota, South Dakota, Iowa, and Wisconsin.
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(“Henry’s”) subsidiaries, distributes consumer products and provides a full range of programs and services to our customers that are focused on helping them manage their business and increase their profitability.
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The acquisition 3 Table of Contents complemented our Wholesale Segment by expanding our footprint, increasing our product offerings in the foodservice space and bringing our customer-centric service approach to a broader customer base.
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We do not maintain any long-term purchase contracts with our suppliers. 3 Table of Contents 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.
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RETAIL SEGMENT Our Retail Segment, through our Healthy Edge Retail Group subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements which focuses on providing high quality products at affordable prices, with an exceptional level of customer service and nutritional consultation.
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BUSINESS STRATEGY Our business strategy focuses on short, medium, and long-term objectives designed to create shareholder value.
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All of the products carried in our stores must meet strict quality and ingredient guidelines, and include offerings such as gluten-free and antibiotic-free grocery and meat products, as well as products containing no artificial colors, flavors, preservatives, or partially hydrogenated oils.
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We also compete with specialty supermarkets, other independent natural foods store chains, small specialty stores, and restaurants.
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We design our retail sites in an efficient and flexible small-store format, which emphasizes a high energy and shopper-friendly environment. We operate within the natural products retail industry, which is a subset of the United States grocery industry.
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The costs and effect on the Company to comply with state and federal environmental regulations were not significant during either fiscal 2024 or fiscal 2023.
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Broad Product Selection Our retail health foods business prides itself in carrying a broad and superior-quality selection of organic and natural food products and vitamin supplements.
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The SEC also maintains a website at www.sec.gov which contains reports, proxies and other company information. ​ 6 Table of Contents
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INFORMATION ON SEGMENTS Information about our segments is presented in Note 13 to the Consolidated Financial Statements included in this Annual Report. COMPETITION—Wholesale Segment Our Wholesale Segment has a significant presence in the regions in which we operate.
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According to The Natural Foods Merchandiser (“NFM”), there are approximately 9,800 natural food retail stores operating independently or as part of small retail chains and approximately 21,000 stores when national chains are included. These competitors include companies such as Whole Foods Market, Sprouts Farmers Market, Natural Grocers, General Nutrition Centers and Vitamin Shoppe.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThey could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling and/or scientific substantiation.
Biggest changeAdditionally, certain products we sell may require reformulation to meet new standards or comply with new regulations or administrative orders. As such, any related product recalls or product reformulations could result in additional record keeping costs, expanded documentation and tracking costs, and expanded 15 Table of Contents or changed product labeling and/or scientific substantiation.
From time to time, one or both of the Company’s business segments may acquire assets from other businesses, all or a portion of another business, or make an equity investment in another business through the purchase of equity or other means.
From time to time, one or both of the Company’s business segments may acquire assets from other businesses, all or a portion of the ownership of another business, or make an equity investment in another business through the purchase of equity or other means.
These and other sources of capital may not be available to us on satisfactory terms, or at all, in the future, particularly in light of current economic conditions, including systemic pressures in the banking system, disruptions in the credit markets and rising interest rates, which could impair our ability to further expand our business. ● Covenants in Our Revolving Credit Facilities May Restrict Our Ability to React to Changes Within Our Business or Industry.
These and other sources of capital may not be available to us on satisfactory terms, or at all, in the future, particularly in light of current economic conditions, including systemic pressures in the banking system, disruptions in the credit markets and rising interest rates, which could impair our ability to further expand our business. ● Covenants in Our Revolving Credit Facilities or Other Debt Agreements May Restrict Our Ability to React to Changes Within Our Business or Industry.
A shortage of qualified employees could require us to enhance our wage and benefits packages in order to compete effectively in the hiring and retention of qualified employees or to hire more expensive temporary employees.
A shortage of qualified employees could require us to enhance our wage and benefits packages to compete effectively in the hiring and retention of qualified employees or to hire more expensive temporary employees.
RISK FACTORS RELATED TO OUR COMMON STOCK ● The Company Has Few Shareholders of Record And, If this Number Remains below 300, as was true as of September 30, 2023, the Company Will No Longer Be Obligated to Report under the Securities Exchange Act of 1934 and in Such Case We May Be Delisted from NYSE American, Reducing the Ability of Investors to Trade in Our Common Stock.
RISK FACTORS RELATED TO OUR COMMON STOCK ● The Company Has Few Shareholders of Record And, If this Number Remains below 300, as was true as of September 30, 2024, the Company Will No Longer Be Obligated to Report under the Securities Exchange Act of 1934 and in Such Case We May Be Delisted from NYSE American, Reducing the Ability of Investors to Trade in Our Common Stock.
The purchase of assets or of all or part of a business or an equity investment in another business can bring significant risks to the Company in a number of areas including purchase price, amount of equity investment, business valuation and recording risks, customer retention risks, risks associated with the assumption of liabilities or obligations, integration risks, technology risks, risks associated with the addition of new employees such as health care costs, and a wide range of other risks and considerations.
The purchase of assets, of all or a portion of a business, or an equity investment in another business can bring significant risks to the Company in a number of areas including purchase price, amount of equity investment, business valuation and recording risks, customer retention risks, risks associated with the assumption of liabilities or obligations, integration risks, technology risks, risks associated with the addition of new employees such as health care costs, and a wide range of other risks and considerations.
In our retail health food business, we compete with a wide range of well-financed regional and national competitors such as Whole Foods Markets, Trader Joe’s, Sprouts Farmers Market, Natural Grocers, Fresh Thyme Farmers Market, General Nutrition Centers, Vitamin Shoppe, and other online competitors such as Amazon™ who all have embarked on aggressive expansion strategies.
In our retail health food business, we compete with a wide range of well-financed regional and national competitors such as Whole Foods Markets, Trader Joe’s, Sprouts Farmers Market, Natural Grocers, General Nutrition Centers, Vitamin Shoppe, and other online competitors such as Amazon™ who all have embarked on aggressive expansion strategies.
There is no assurance that quality natural and organic products including dietary supplements, fresh and processed foods and vitamins will be available to meet our stores future needs. If conventional supermarkets increase their natural and organic product offerings or if new laws require the reformulation of certain products to meet tougher standards, the supply of these products may be constrained.
There is no assurance that quality natural and organic products including dietary supplements, fresh and processed foods and vitamins will be available to meet our stores’ future needs. If conventional supermarkets increase their natural and organic product offerings or if new laws require the reformulation of certain products to meet tougher standards, the supply of these products may be constrained.
In addition, product cost inflation may negatively impact consumer spending decisions, which could adversely impact our sales. Conversely, our business may be adversely impacted by periods of prolonged product cost deflation because we make a significant portion of our sales at prices that are based on the cost of products we sell plus a percentage markup.
In addition, product cost inflation may negatively impact consumer discretionary spending, which could adversely impact our sales. Conversely, our business may be adversely impacted by periods of prolonged product cost deflation because we make a significant portion of our sales at prices that are based on the cost of products we sell plus a percentage markup.
Specifically, these restrictions limit our ability, among other things, to incur additional indebtedness, make 14 Table of Contents distributions, pay dividends, issue stock of subsidiaries, make investments, repurchase stock, create liens, enter into transactions with affiliates, merge or consolidate, or transfer and sell our assets. ● Failure to Meet Restrictive Covenants in Our Revolving Credit Facilities Could Result in Acceleration of the Facilities and We May not be Able to Find Alternative Financing.
Specifically, these restrictions limit our ability, among other things, to incur additional indebtedness, make distributions, pay dividends, issue stock of subsidiaries, make investments, repurchase stock, create liens, enter into transactions with affiliates, merge or consolidate, or transfer and sell our assets. ● Failure to Meet Restrictive Covenants in Our Revolving Credit Facilities Could Result in Acceleration of the Facilities and We May not be Able to Find Alternative Financing.
Our retail stores carry many perishable products which may result in significant product inventory losses in the event of extended power outages, natural disasters, or other catastrophic occurrences. 10 Table of Contents ● A Reduction in Traffic to Anchor Stores in the Shopping Areas in Close Proximity to Our Stores Could Significantly Reduce Our Sales and Leave Us With Unsold Inventory, Which Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations.
Our retail stores carry many perishable products which may result in significant product inventory losses in the event of extended power outages, natural disasters, or other catastrophic occurrences. ● A Reduction in Traffic to Anchor Stores in the Shopping Areas in Close Proximity to Our Stores Could Significantly Reduce Our Sales and Leave Us With Unsold Inventory, Which Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations.
If we are unable to anticipate and satisfy consumer merchandise preferences in the regions where we operate, our sales may decrease, and we may be forced to increase markdowns of slow-moving merchandise, either of which could negatively impact our business, results of operations, cash flow, and financial condition. ● If We or Our Third-Party Suppliers Fail to Comply With Regulatory Requirements, or are Unable to Provide Products that Meet Our Specifications, Our Business and Our Reputation Could be Negatively Impacted.
If we are unable to anticipate and satisfy consumer merchandise preferences in the regions where we operate, our sales may decrease, and we may be forced to increase markdowns of slow-moving merchandise, either of which could negatively impact our business, results of operations, cash flow, and financial condition. 10 Table of Contents ● If We or Our Third-Party Suppliers Fail to Comply With Regulatory Requirements, or are Unable to Provide Products that Meet Our Specifications, Our Business and Our Reputation Could be Negatively Impacted.
If the testing performed indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other intangible assets and the implied fair value of the goodwill or other intangible assets in the period the determination is made.
If our testing indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other intangible assets and the implied fair value of the goodwill or other intangible assets in the period the determination is made.
If the number of owners of record (including direct participants in the Depository Trust Company) of our common stock remains below 300, as was true as of September 30, 2023, our obligation to file reports under the Securities Exchange Act of 1934 could be suspended.
If the number of owners of record (including direct participants in the Depository Trust Company) of our common stock remains below 300, as was true as of September 30, 2024, our obligation to file reports under the Securities Exchange Act of 1934 could be suspended.
Additionally, many of our Wholesale Segment customers are thinly capitalized and their access to credit in the current business environment may be impacted by changes in economic conditions, systemic pressures in the banking system, including disruptions in the credit markets, rising interest rates or other factors, which may affect their ability to operate as a going concern, presenting additional credit risk for the Company.
Additionally, many of our Wholesale Segment customers are thinly capitalized and their access to credit may be impacted by changes in economic conditions, systemic pressures in the banking system, including disruptions in the credit markets, rising interest rates or other factors, which may affect their ability to operate as a going concern, presenting additional credit risk for the Company.
To date, most of the regulatory and compliance burden related to this legislation has fallen upon product manufacturers. However, if the FDA were to impose new regulations impacting wholesale distributors that we are not able to comply 7 Table of Contents with, we could face remedial actions such as fines, suspension of product distribution rights, and/or termination of operations.
To date, most of the regulatory and compliance burden related to this legislation has fallen upon product manufacturers. However, if the FDA were to impose new regulations impacting wholesale distributors that we are not able to comply with, we could face remedial actions such as fines, suspension of product distribution rights, and/or termination of operations.
If any of these events were to occur, our results from operations, cash flow, liquidity position, and overall financial condition could be negatively impacted. 11 Table of Contents RISK FACTORS RELATED TO ALL OF OUR BUSINESSES ● Significant or Prolonged Periods of Higher Interest Rate Environments May Have an Adverse Effect on Our Profitability.
If any of these events were to occur, our results from operations, cash flow, liquidity position, and overall financial condition could be negatively impacted. RISK FACTORS RELATED TO ALL OF OUR BUSINESSES ● Significant or Prolonged Periods of Higher Interest Rate Environments May Have an Adverse Effect on Our Profitability.
Many of our stores are located in close proximity to shopping areas that also accommodate other well-known anchor stores. Sales at our stores are derived, in part, from the volume of traffic generated by the other anchor stores in the shopping areas where our stores are located.
Many of our stores are located in close proximity to shopping areas that also accommodate other well-known anchor stores. Sales at our stores are derived, in part, from the volume of traffic generated by the other anchor stores in these shopping areas.
The cigarette manufacturer defendants settled the first four of these cases with Mississippi, Florida, Texas and Minnesota by separate agreements. These states are referred to as non-MSA states. In November 1998, the major U.S. tobacco product manufacturers entered into the MSA with the remaining 46 states, the District of Columbia and certain U.S. territories.
The cigarette manufacturer defendants settled the first four of these cases with Mississippi, Florida, Texas and Minnesota by separate agreements. These states are referred to as non-MSA states. In November 1998, the major U.S. tobacco product manufacturers entered into the MSA with the remaining 46 states, the 8 Table of Contents District of Columbia and certain U.S. territories.
While the Company strives to minimize the risks associated with its acquisition or equity investment activities, issues may arise which could have a material negative impact on the Company’s results of operations, balance sheet, and cash flows. ● We May Be Subject to Risks Associated with Trade Tariffs.
While the Company strives to minimize the risks associated with 11 Table of Contents its acquisition or equity investment activities, issues may arise which could have a material negative impact on the Company’s results of operations, balance sheet, and cash flows. ● We May Be Subject to Risks Associated with Trade Tariffs.
However, if litigation challenging the validity of the MSA were to be successful and all or part of the MSA is invalidated, we could be subject to substantial litigation due to the sales of cigarettes and other tobacco products, and we may not be 9 Table of Contents indemnified for such costs by the tobacco product manufacturers in the future.
However, if litigation challenging the validity of the MSA were to be successful and all or part of the MSA is invalidated, we could be subject to substantial litigation due to the sales of cigarettes and other tobacco products, and we may not be indemnified for such costs by the tobacco product manufacturers in the future.
Our results of operations and financial condition are particularly sensitive to changes in the overall economy, including the level of consumer discretionary spending. Consumer discretionary spending may be negatively impacted by inflation, rising interest rates, recessions or other general economic uncertainties or downturns.
Our results of operations and financial condition are particularly sensitive to changes in the overall economy, including the level of consumer discretionary spending. Consumer discretionary spending may be negatively impacted by inflation, 12 Table of Contents rising interest rates, recessions or other general economic uncertainties or downturns.
We also face competition from Whole Foods Market and/or its parent company Amazon™, which pose a threat to the supply chains of food and grocery retailers as well as convenience stores served by wholesale distribution companies as they continue to pursue a vertical, multi-channel sales strategy whereby both retail consumers and business level customers are targeted.
We also face competition from Whole Foods Market and/or its parent company Amazon™, which pose a threat to the supply chains of food and grocery retailers as well as convenience stores served by wholesale distribution companies as they continue to pursue a vertical, multi-channel sales strategy targeting both retail consumers and business level customers.
While we have employment agreements with certain key personnel, the loss of service from any of our executive officers or key employees could harm our business. 15 Table of Contents ● We Operate in a Competitive Labor Market and Some of Our Employees Are Covered by Collective Bargaining Agreements.
While we have employment agreements with certain key personnel, the loss of service from any of our executive officers or key employees could harm our business. ● We Operate in a Competitive Labor Market and Some of Our Employees Are Covered by Collective Bargaining Agreements.
As a result, our profit levels may be negatively impacted during periods of product cost deflation, even though our gross profit percentage may remain relatively constant. 13 Table of Contents ● We Rely Heavily on Information Technology Systems to Operate Our Business.
As a result, our profit levels may be negatively impacted during periods of product cost deflation, even though our gross profit percentage may remain relatively constant. ● We Rely Heavily on Information Technology Systems to Operate Our Business.
The Company purchases products from a wide range of vendors in both of its businesses. Some of our vendors may import certain products as part of their manufacturing processes and could be impacted by higher costs resulting from trade tariffs. Further, the impact of higher costs at the retail level may negatively impact consumer disposable income and demand.
The Company purchases products from a wide range of vendors in both of its businesses. Some of our vendors may import certain products as part of their manufacturing processes and could be impacted by higher costs resulting from trade tariffs. Further, the impact of higher costs at the retail level may negatively impact consumer discretionary spending and demand.
In the event that our product purchase costs from our vendors increase and we cannot pass on those price increases or if the retail level demand for the products we sell decreases, the Company’s results of operations, balance sheet, and cash flows could be negatively impacted. 12 Table of Contents ● Employee Healthcare Benefits Represent a Significant Expense for Our Company and May Negatively Affect Our Profitability.
In the event that our product purchase costs from our vendors increase and we cannot pass on those price increases to our customers, or if the retail level demand for the products we sell decreases, the Company’s results of operations, balance sheet, and cash flows could be negatively impacted. ● Employee Healthcare Benefits Represent a Significant Expense for Our Company and May Negatively Affect Our Profitability.
Our revolving credit facilities impose certain restrictions on us that could increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for and reacting to changes in our business and industry.
Our revolving credit facilities and other debt agreements impose certain restrictions on us that could increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for and reacting to changes in our business and industry.
These provisions include: 16 Table of Contents ● supermajority voting requirements to amend certain provisions in our certificate of incorporation; ● non-cumulative voting for directors; ● control by our Board of Directors of the size of our Board of Directors; ● limitations on the ability of stockholders to call special meetings of stockholders; and ● advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings. ​ ITEM 1B.
These provisions include: ● supermajority voting requirements to amend certain provisions in our certificate of incorporation; ● non-cumulative voting for directors; ● control by our Board of Directors of the size of our Board of Directors; ● limitations on the ability of stockholders to call special meetings of stockholders; and ● advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings. ​
Because we do not control the actual production of the products we sell, we are also subject to delays caused by interruption in production based on conditions beyond our control.
Because we do not control the actual 14 Table of Contents production of the products we sell, we are also subject to delays caused by interruption in production based on conditions beyond our control.
Healthcare represents a significant expense item for our Company and there is a general upward trend in healthcare costs nationwide. While we strive to control these costs through modifications to insurance coverage, including co-pays and deductibles, there can be no assurance that we will be as successful in controlling such costs in the future.
Healthcare represents a significant expense item for our Company and there is a general upward trend in healthcare costs nationwide. While we strive to control these costs through modifications to insurance coverage, including co-pays and deductibles, there can be no assurance that we will be able to successfully control such costs in the future.
Our business operations could be negatively impacted by acts of civil unrest, or violence beyond our control.
Our business operations could be negatively impacted by acts of civil unrest or violence, which are beyond our control.
Any Disruptions to These Technology Systems or if These Systems were Made Unavailable for Use, May Have a Material Adverse Effect on Our Business. We rely extensively on our information technology systems and those of third parties to run all aspects of our business.
Any Disruptions to These Technology Systems or if These Systems were Made Unavailable for Use, May Have a Material Adverse Effect on Our Business. We rely extensively on our information technology systems and those of third parties to operate our business.
We annually test goodwill and intangible assets with indefinite useful lives to determine if impairment has occurred. Additionally, interim reviews must be performed whenever events or changes in circumstances indicate that impairment may have occurred.
We annually test goodwill and intangible assets with indefinite useful lives to determine if impairment has occurred. Additionally, we perform interim reviews whenever events or changes in circumstances indicate that impairment may have occurred.
These estimates can be affected by numerous factors, including potential changes in economic, industry or market conditions, changes in business operations, changes in competition or changes in our stock price and market capitalization.
These estimates can be affected by numerous factors, including potential changes in economic, industry or market conditions, changes in business operations, changes 13 Table of Contents in competition or changes in our stock price and market capitalization.
Most of these competitors may have greater financial and marketing resources than the Company and may be able to devote greater resources to sourcing, promoting, and selling their products. In response to heightened competition, the Company is implementing a repositioning strategy for its retail business.
Most of these competitors may have greater financial and marketing resources than the Company and may be able to devote greater resources to sourcing, promoting, and selling their products. In response to heightened competition, the Company is continuing to implement a repositioning strategy 9 Table of Contents for its retail business.
If we are not able to meaningfully pass on these costs to customers, it could adversely impact our business, results of operations, cash flow, and financial condition. 8 Table of Contents ● The Wholesale Distribution of Convenience Store Products Is Significantly Affected by Pricing Decisions and Promotional Programs Offered by Manufacturers and State Taxing Authorities.
Inflation can also impact fuel prices. If we are not able to meaningfully pass on these costs to customers, it could adversely impact our business, results of operations, cash flow, and financial condition. ● The Wholesale Distribution of Convenience Store Products Is Significantly Affected by Pricing Decisions and Promotional Programs Offered by Manufacturers and State Taxing Authorities.
The distribution of cigarettes represents a significant portion of our business. During fiscal 2023, approximately 62% of our consolidated revenues came from the distribution of cigarettes, which generated approximately 19% of our consolidated gross profit.
The distribution of cigarettes represents a significant portion of our business. During fiscal 2024, approximately 62% of our consolidated revenues came from the distribution of cigarettes, which generated approximately 18% of our consolidated gross profit.
We may face exposure to product liability claims if the use of products sold by us is alleged to cause injury or illness. However, product liability insurance may not continue to be available at a reasonable cost, or, if available, may not be adequate to cover all of our liabilities.
We may face exposure to product liability claims if the use of any product we sell is alleged to cause injury or illness. However, product liability insurance may not continue to be available at a reasonable cost, or, if available, may not be adequate to cover all of our liabilities.
In the past, some large manufacturers have decided to engage in direct distribution of their products and eliminate distributors such as the Company.
Historically, some large manufacturers of the products we carry have decided to engage in direct distribution of their products and eliminate distributors such as the Company.
Customer traffic may be adversely affected by regional economic downturns, a general downturn in the local area where our store is located, long-term nearby road construction projects, the closing of nearby anchor stores or other nearby stores or the decline of the shopping environment in a particular shopping area.
Customer traffic may be adversely affected by local and regional economic downturns in the areas where our stores are located, long-term nearby road construction projects, the closing of nearby anchor stores or other nearby stores or the decline of the shopping environment in a particular shopping area.
We expect that our principal sources of funds will be cash generated from our operations and, if necessary, borrowings under our revolving credit facilities.
We expect that our principal sources of funds will be cash generated from our operations and, if necessary, borrowings under our revolving credit facilities or other debt financing arrangements.
Most of these competitors generally offer a wide range of products at prices comparable to those offered by our Company. Some of our competitors have substantial financial resources and long-standing customer relationships.
Most of our wholesale distribution competitors generally offer a wide range of products at prices comparable to those we offer. Some of our competitors have substantial financial resources and long-standing customer relationships.
In addition, at September 2023, approximately thirty of our delivery drivers in our Wholesale Segment are covered by a collective bargaining agreement with a labor organization, which expires in November 2023. A new labor agreement has been ratified by the IAMAW through November 2026.
In addition, at September 2024, approximately thirty of our delivery drivers in our Wholesale Segment are covered by a collective bargaining agreement with a labor organization, which expires in November 2026.
Cigarette and tobacco products (including vaping products) are subject to substantial excise taxes and future legislation could significantly increase such taxes. Significant increases in cigarette and tobacco-related taxes and fees have been imposed by city, state, and federal governments in recent years. Further, the evolving regulatory responsibilities of the FDA are being funded by fees imposed on tobacco companies.
Cigarette and tobacco products (including vaping products) are subject to substantial excise taxes and future legislation could significantly increase such taxes. Significant increases in cigarette and tobacco-related taxes and fees have been proposed and enacted by city, state, and federal governments in recent years.
Should the value of goodwill or other intangible assets become impaired, our financial condition and results of operations may be adversely affected. ● Capital Needed for Expansion May Not Be Available.
Should the value of goodwill or other intangible assets become impaired, our financial condition and results of operations may be adversely affected. ● Capital Needed for Expansion May Not Be Available. Acquiring other distributors or existing retail stores, developing and opening new retail stores and distribution facilities, and expanding existing distribution facilities requires significant amounts of capital.
These fees have been passed on to wholesale distributors and end consumers in the form of higher prices for cigarette and tobacco products.
Further, the evolving regulatory 7 Table of Contents responsibilities of the FDA are being funded by fees imposed on tobacco companies. These fees have been passed on to wholesale distributors and end consumers in the form of higher prices for cigarette and tobacco products.
Our results could be materially impacted by claims and other expenses related to such insurance plans if future occurrences and claims differ from these assumptions and historical trends. ● A Deterioration in Economic Conditions May Negatively Impact Sales in Both Our Business Segments.
Our results could be materially impacted by claims and other expenses related to such insurance plans if future occurrences and claims differ from these assumptions and historical trends. ● We May Be Subject to Risks Associated with Insurance Renewals.
If any of these events were to occur, our results of operations, business, cash flow, and financial condition would be adversely affected.
If any of these events were to occur, our results of operations, business, cash flow, and financial condition would be adversely affected. The Company operates and plans based on the current structure of government and other regulatory agencies and their related framework of oversight and standards setting.
The acquisition of other distributors or existing retail stores, the development and opening of new retail stores and distribution facilities, and the expansion of existing distribution facilities requires significant amounts of capital. In the past, our growth has been funded primarily through proceeds from bank debt, private placements of equity and debt and internally generated cash flow.
Historically, our growth has been funded primarily through proceeds from bank debt, private placements of equity and debt and internally generated cash flow.
We expect this agreement to be executed during the Company’s first quarter of fiscal 2024. ● We Are Subject to Significant Governmental Regulation and If We Are Unable to Comply with Regulations That Affect Our Business or If There Are Substantial Changes in These Regulations, Our Business Could Be Adversely Affected.
The terms and conditions of existing, renegotiated or new collective bargaining agreements could also increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or to adapt to changing business needs or strategy. ● We Are Subject to Significant Governmental Regulation and If We Are Unable to Comply with Regulations That Affect Our Business or If There Are Substantial Changes in These Regulations, Our Business Could Be Adversely Affected.
While we do not manufacture any products, any of the aforementioned items could disrupt the supply levels of inventory that we sell. Any or all of such requirements could have an adverse effect on our results of operations, business, cash flow, and financial condition.
Any such changes in our regulatory schemes could disrupt our supply chain and sales and have an adverse impact on our results of operations, business, cash flow, and financial condition.
Removed
We cannot predict the impact that future laws, regulations, interpretations or applications, the effect of additional government regulations or administrative orders, when and if promulgated, or disparate federal, state and local regulatory schemes would have on our business in the future.
Added
The Company uses a combination of insurance and self-insurance plans to provide for the potential liabilities for workers’ compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability, and employee health care benefits.
Removed
UNRESOLVED STAFF COMMENTS Not applicable. ​ ITEM 1C. CYBERSECURITY Not applicable. ​
Added
The Company may not be able to renew various forms of insurance with adequate levels of coverage, at favorable rates, or obtain insurance at all based upon market conditions within the insurance industry and/or because of the industry in which the Company operates. ● A Deterioration in Economic Conditions May Negatively Impact Sales in Both Our Business Segments.
Added
Strikes, work stoppages, or other business interruptions could occur if we are unable to renew these agreements on satisfactory terms or enter into new agreements on satisfactory terms, which could impair distribution of our products or result in a loss of sales, which could adversely affect our business, financial position and results of operations.
Added
We cannot predict how any changes to any of these governmental or regulatory frameworks, or changes in laws, regulations, administrative orders or the interpretation or application of such items, may impact our business. Any changes in the current regulatory environment may change, restrict, or discontinue which products the Company is allowed to sell.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs further described in Note 7 to the Consolidated Financial Statements, certain of our distribution facilities in Quincy, Illinois, Springfield, Missouri, Bismarck, North Dakota, and Rapid City, South Dakota are owned by the Company and are included as collateral under AMCON’s credit facility (“the AMCON Facility”).
Biggest changeAs further described in Note 7 to the Consolidated Financial Statements, certain of our distribution facilities in Quincy, Illinois, Springfield, Missouri, Bismarck, North Dakota, Rapid City, South Dakota, Colorado City, Colorado, East Peoria, Illinois and Fairview Heights, Illinois are owned by the Company and are included as collateral under AMCON’s credit facility (“the AMCON Facility”).
Our distribution center in Alexandria, Minnesota is owned by the Company and is included as collateral under Henry’s Foods, Inc.’s credit facility (“the Henry’s Facility”). Team Sledd, LLC’s principal office and warehouse in West Virginia are collateral against two separate notes payable and Team Sledd’s credit facility (the “Team Sledd Facility”).
Henry’s distribution center in Alexandria, Minnesota is owned by the Company and is included as collateral under Henry’s credit facility (“the Henry’s Facility”). Team Sledd’s principal office and warehouse in 17 Table of Contents Wheeling, West Virginia are collateral against two separate notes payable and Team Sledd’s credit facility (the “Team Sledd Facility”).
PROPERTIE S The location and approximate square footage of the Company’s nine distribution centers and 17 retail stores at September 2023 are set forth below: ​ ​ ​ Location Square Feet Distribution—IL, MN, MO, ND, NE, SD, TN & WV 1,316,000 Retail—AR, FL, & OK 173,100 Total Square Footage 1,489,100 The Company leases certain distribution facilities, retail stores, offices, and certain equipment under operating leases.
PROPERTIE S The location and approximate square footage of the Company’s 13 distribution centers and 15 retail stores at September 2024 are set forth below: ​ ​ ​ Location Square Feet Distribution—CO, IL, IN, MN, MO, ND, NE, SD, TN & WV 1,705,000 Retail—AR, FL, & OK 163,000 Total Square Footage 1,868,000 The Company leases certain distribution facilities, retail stores, offices, and certain equipment under operating leases.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings 17 Item 4. Mine Safety Disclosures 17 PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18 Item 6. [Reserved] 19 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A.
Biggest changeItem 3. Legal Proceedings 18 Item 4. Mine Safety Disclosures 18 PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6. [Reserved] 19 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 17 Table of Contents EXECUTIVE OFFICERS OF THE REGISTRANT Executive officers of our Company are appointed by the Board of Directors and serve at the discretion of the Board.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ EXECUTIVE OFFICERS OF THE REGISTRANT Executive officers of our Company are appointed by the Board of Directors and serve at the discretion of the Board. The following table sets forth certain information with respect to all executive officers of our Company. ​ ​ ​ ​ ​ Name Age Position Christopher H.
Schmaderer held financial management roles with Hewlett Packard (HP) and before that practiced public accounting, primarily with the accounting firm Grant Thornton, LLP. Mr. Schmaderer also holds a Master of Business Administration (MBA) from the University of Nebraska-Omaha. PART I I
Schmaderer held financial management roles with Hewlett Packard (HP) and before that practiced public accounting, primarily with the accounting firm Grant Thornton, LLP. Mr. Schmaderer also holds a Master of Business Administration (MBA) from the University of Nebraska-Omaha. ​ ​ 18 Table of Contents PART I I
The following table sets forth certain information with respect to all executive officers of our Company. ​ ​ ​ ​ ​ Name Age Position Christopher H. Atayan 63 Chairman of the Board, Chief Executive Officer, Director Andrew C. Plummer 49 President, Chief Operating Officer, Director Charles J. Schmaderer ​ 54 ​ Vice President, Chief Financial Officer, Secretary ​ CHRISTOPHER H.
Atayan 64 Chairman of the Board, Chief Executive Officer, Director Andrew C. Plummer 50 President, Chief Operating Officer, Director Charles J. Schmaderer ​ 55 ​ Vice President, Chief Financial Officer, Secretary ​ CHRISTOPHER H.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAt September 2023, 72,637 shares of the Company’s common shares remained authorized for repurchase in either the open market or privately negotiated transactions, as previously approved by the Company’s Board of Directors. In October 2023, the Board of Directors renewed the repurchase authorization for up to 75,000 shares of the Company’s common stock.
Biggest changeAt September 2024, 75,000 shares of the Company’s common shares remained authorized for repurchase in either the open market or privately negotiated transactions, as previously approved by the Company’s Board of Directors in October 2023. Management has discretion to determine the timing of any repurchases, as well as the number and pricing of any shares to be repurchased.
REPURCHASE OF COMPANY SHARES The Company repurchased a total of 2,363 shares of its common stock during fiscal 2023 for cash totaling approximately $0.4 million. The Company did not repurchase any shares of its common stock during fiscal 2022. All repurchased shares were recorded in treasury stock at cost.
REPURCHASE OF COMPANY SHARES The Company did not repurchase any shares of its common stock during fiscal 2024. During fiscal 2023, the Company repurchased a total of 2,363 shares of its common stock for cash totaling approximately $0.4 million. All repurchased shares were recorded in treasury stock at cost.
Such an action by the Board of Directors could result from, among other reasons, changes in the marketplace, changes in 18 Table of Contents our performance or capital needs, changes in federal income tax laws, disruptions in the capital markets, or other events affecting our business, liquidity or financial position.
Such an action by the Board of Directors could result from, among other reasons, changes in the marketplace, changes in our performance or capital needs, changes in federal income tax laws, disruptions in the capital markets, or other events affecting our business, liquidity or financial position.
As of that date, the Company had approximately 896 persons holding common shares beneficially of which approximately 130 are shareholders of record (including direct participants in the Depository Trust Company). DIVIDEND POLICY On a quarterly basis, the Company’s Board of Directors evaluates the potential declaration of dividend payments on the Company’s common stock.
As of that date, the Company had approximately 795 persons holding common shares beneficially of which approximately 140 are shareholders of record (including direct participants in the Depository Trust Company). DIVIDEND POLICY On a quarterly basis, the Company’s Board of Directors evaluates the potential declaration of dividend payments on the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON STOCK The Company’s common stock trades on NYSE American under the trading symbol “DIT”. As of November 6, 2023, the closing price of our common stock on NYSE American was $192.00 and there were 630,362 common shares outstanding.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON STOCK The Company’s common stock trades on NYSE American under the trading symbol “DIT”. As of November 6, 2024, the closing price of our common stock on NYSE American was $132.00 and there were 645,462 common shares outstanding.
The Company paid cash dividends of approximately $3.5 million and $3.4 million, or $5.72 per common share, during fiscal 2023 and fiscal 2022, respectively. During the fiscal years ended September 30, 2023 and September 30, 2022, the Company did not sell any unregistered securities.
The Company paid cash dividends of approximately $0.6 million, or $1.00 per common share, and $3.5 million, or $5.72 per common share, during fiscal 2024 and fiscal 2023, respectively. During the fiscal years ended September 30, 2024 and September 30, 2023, the Company did not sell any unregistered securities.
Management was given discretion to determine the number and pricing of the shares to be purchased, as well as the timing of any such purchases. EQUITY COMPENSATION PLAN INFORMATION We refer you to Item 12 of this report for the information required by Item 201(d) of SEC Regulation S-K. ​
EQUITY COMPENSATION PLAN INFORMATION We refer you to Item 12 of this report for the information required by Item 201(d) of SEC Regulation S-K. ​
Removed
During the fourth quarter of fiscal 2023, the Company repurchased shares of its common stock for cash totaling approximately $0.4 million.
Removed
The following table summarizes these repurchases made by or on behalf of the Company or certain affiliated purchasers of shares of our common stock for the quarterly period ended September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period ​ (a) Total Number of Shares (or Units) Purchased ​ (b) Average Price Paid per Share (or Unit) ​ (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs ​ (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs* July 1 - 31, 2023 2,363 $ 171.34 2,363 72,637 August 1 - 31, 2023 — ​ - — 72,637 September 1 - 30, 2023 — ​ ​ - — 72,637 Total 2,363 ​ $ - 2,363 72,637 * In October 2023 and subsequent to the end of fiscal 2023, the Board of Directors authorized purchases of up to 75,000 shares of our Company’s common stock in open market or negotiated transactions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIt 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: ● risks associated with higher interest rates or prolonged periods of higher interest rates and the related impact on demand, customer credit risk, profitability, and cash flows for both the Company and our customer base, particularly as it relates to variable interest rate borrowings, as well as the risk that such borrowings may not be renewed in the future on favorable terms or at all, ​ ● risks associated with any systemic pressures in the banking system, particularly as they relate to customer credit risk and any resulting impact on our cash flow and our ability to collect on our receivables, ​ ● risks associated with an inflationary operating environment, particularly as it relates to wages, fuel, interest, commodity prices, and customer credit risk which impact our operating cost structure and could impact food ingredient costs and demand for many of the products we sell, ​ ● regulations, potential bans and/or litigation related to the manufacturing, distribution, and sale of certain cigarette, tobacco, and vaping products imposed by the FDA, state or local governmental agencies, or other parties, including proposed forthcoming regulations around the manufacture and distribution of certain menthol and flavored tobacco products, ​ ● risks associated with the threat or occurrence of epidemics or pandemics (such as COVID-19 or its variants) or other public health issues, including the continued health of our employees and management, the reduced demand for our goods and services or increased credit risk from customer credit defaults resulting from an economic downturn, ​ 29 Table of Contents ● risks associated with the imposition of governmental orders restricting our operations and the operations of our suppliers and customers, in particular, disruptions to our supply chain or our ability to procure products or fulfill orders due to labor shortages in our warehouse operations, ​ ● risks associated with the Company’s business model which experienced both higher sales volumes and labor costs, during the COVID-19 pandemic, and the risk of sales returning to pre-pandemic levels without the Company being able to offset increases in its cost structure, ​ ● risks associated with the acquisition of assets, new businesses or equity investments by either of our business segments including, but not limited to, risks associated with consummating such transactions on expected terms or timing, purchase price and business valuation and recording risks, and risks related to the assumption of certain liabilities or obligations, ● risks associated with the integration of new businesses or equity investments by either of our business segments including, but not limited to, risks associated with vendor and customer retention, technology integration, and the potential loss of any key management personnel or employees, ● increasing competition and market conditions in our wholesale and retail health food businesses and any associated impact on the carrying value and any potential impairment of assets (including intangible assets) within those businesses, ​ ● risk that our repositioning strategy for our retail business will not be successful, ​ ● risks associated with opening new retail stores, ​ ● if online shopping formats such as Amazon™ continue to grow in popularity and further disrupt traditional sales channels, it may present a significant direct risk to our brick and mortar retail business and potentially to our wholesale distribution business, ​ ● the potential impact that ongoing, decreasing, or changing trade tariffs and trade policies may have on our product costs or on consumer disposable income and demand, ​ ● increasing product and operational costs resulting from ongoing supply chain disruptions, an intensely competitive labor market with a limited pool of qualified workers, and higher incremental costs associated with the handling and transportation of certain product categories such as foodservice, ​ ● increases in state and federal excise taxes on cigarette and tobacco products and the potential impact on demand, particularly as it relates to current legislation under consideration which could significantly increase such taxes, ​ ● risks associated with disruptions to our technology systems or those of third parties upon which we rely, including security breaches, cyber and ransomware attacks, malware, or other methods by which such information systems could or may have been compromised or impacted, ​ ● increases in inventory carrying costs and customer credit risks, ​ ● changes in pricing strategies and/or promotional/incentive programs offered by cigarette and tobacco manufacturers, ​ ● changing demand for the Company’s products, particularly cigarette, tobacco and vaping products, ​ ● risks that product manufacturers may begin selling directly to convenience stores and bypass wholesale distributors, ​ ● changes in laws and regulations and ongoing compliance related to health care and associated insurance, ​ 30 Table of Contents ● increasing health care costs for both the Company and consumers and its potential impact on discretionary consumer spending, ​ ● decreased availability of capital resources, ​ ● domestic regulatory and legislative risks, ​ ● poor weather conditions, and the adverse effects of climate change, ​ ● consolidation trends within the convenience store, wholesale distribution, and retail health food industries, ​ ● risks associated with labor disputes (strikes), natural disasters, domestic/political unrest and incidents of violence, or any restrictions, regulations, or security measures implemented by governmental bodies in response to these items, and ​ ● other risks over which the Company has little or no control, and any other factors not identified herein. ​ Changes in these factors could result in significantly different results.
Biggest changeIt 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: ● risks associated with all forms of insurance renewals and the risk that the Company may not be able to renew various insurance with adequate levels of coverage, at favorable rates, or obtain insurance at all based upon market conditions within the insurance industry and/or because of the industry in which the Company operates, ​ ● risks associated with unrest in certain global regions which could further disrupt world supply chains, manufacturing centers, and shipping routes, impacting commodity/product availability and/or cost, as well as consumer demand trends, ​ 29 Table of Contents ● risks associated with higher interest rates or prolonged periods of higher interest rates and the related impact on demand, customer credit risk, profitability, and cash flows for both the Company and its customer base, particularly as it relates to variable interest rate borrowings, as well as the risk that such borrowings may not be renewed in the future on favorable terms or at all, ​ ● risks associated with any systemic pressures in the banking system, particularly as they relate to customer credit risk and any resulting impact on our cash flow and our ability to collect on our receivables, ​ ● risks associated with an inflationary operating environment, particularly as it relates to wages, fuel, interest, commodity prices, and customer credit risk, which impact our operating cost structure and could impact food ingredient costs and demand for many of the products we sell, ​ ● regulations, potential bans, limitations and/or litigation related to the manufacturing, distribution, and sale of certain cigarette, e-cigarette, tobacco, and vaping products imposed by the FDA, state or local governmental agencies, or other parties, including proposed and pending regulations and/or product approvals/authorizations related to the manufacturing, distribution and sale of certain menthol, vaping, and flavored tobacco products, ​ ● risks associated with the threat or occurrence of epidemics or pandemics (such as COVID-19 or its variants) or other public health issues, including the continued health of our employees and management, the reduced demand for our goods and services or increased credit risk from customer credit defaults resulting from an economic downturn, ​ ● risks associated with the imposition of governmental orders restricting our operations and the operations of our suppliers and customers, in particular, disruptions to our supply chain or our ability to procure products or fulfill orders due to labor shortages in our warehouse operations, ​ ● risks associated with events such as the COVID-19 pandemic, during which the Company experienced both higher sales volumes and labor costs but then subsequently experienced a decline in sales volumes, with limited ability to offset or pass on higher operating costs, ​ ● risks associated with the acquisition of businesses or assets, capital asset expenditure projects by either of our business segments such the development of new facilities/locations or upgrades to distribution centers or retail stores, including, but not limited to, risks associated with consummating such transactions on expected terms or timing, purchase price and business valuation and recording risks, and risks related to the assumption of certain liabilities or obligations, ● risks associated with the integration of new businesses or equity investments by either of our business segments including, but not limited to, risks associated with vendor and customer retention, technology integration, and the potential loss of any key management personnel or employees, ● increasing competition and market conditions in our wholesale and retail health food businesses and any associated impact on the carrying value and any potential impairment of assets (including intangible assets) within those businesses, ​ ● risk that our repositioning strategy for our retail business will not be successful, ​ ● risks associated with opening new retail stores, ​ ● risks to our brick and mortar retail business and potentially to our wholesale distribution business if online shopping formats such as Amazon™ continue to grow in popularity and further disrupt traditional sales channels, ​ ● the potential impact that ongoing or proposed increases in trade tariffs and/or changes to trade policies may have on raw materials or finished goods sourced from abroad which could result in higher prices for the products we sell while also decreasing consumer disposable income and demand, 30 Table of Contents ● increasing product and operational costs resulting from ongoing supply chain disruptions, an intensely competitive labor market with a limited pool of qualified workers, and higher incremental costs associated with the handling and transportation of certain product categories such as foodservice, ​ ● increases in state and federal excise taxes on cigarette and tobacco products and the potential impact on demand, particularly as it relates to current legislation under consideration which could significantly increase such taxes, ​ ● risks associated with disruptions to our technology systems or those of third parties upon which we rely, including security breaches, cyber and ransomware attacks, malware, or other methods by which such information systems could or may have been compromised or impacted, ​ ● increases in inventory carrying costs and customer credit risks, ​ ● changes in pricing strategies and/or promotional/incentive programs offered by cigarette and tobacco manufacturers, ​ ● changing demand for the Company’s products, particularly cigarette, tobacco and vaping products, ​ ● risks that product manufacturers may begin selling directly to convenience stores and bypass wholesale distributors, ​ ● changes in laws and regulations and ongoing compliance related to health care and associated insurance, ​ ● increasing health care costs for both the Company and consumers and its potential impact on discretionary consumer spending, ​ ● decreased availability of capital resources, ​ ● domestic regulatory and legislative risks, ​ ● poor weather conditions, and the adverse effects of climate change, ​ ● consolidation trends within the convenience store, wholesale distribution, and retail health food industries, ​ ● risks associated with labor disputes (strikes), natural disasters, domestic/political unrest and incidents of violence, or any restrictions, regulations, or security measures implemented by governmental bodies in response to these items, and ​ ● other risks over which the Company has little or no control, and any other factors not identified herein. ​ Changes in these factors could result in significantly different results.
MANDATORILY REDEEMABLE NON-CONTROLLING INTEREST Mandatorily redeemable non-controlling interest represents the non-controlling interest in the Company’s strategic investment in Team Sledd, LLC. NATURE OF ESTIMATES REQUIRED . We record the mandatorily redeemable non-controlling interest at fair value. This valuation requires management to make significant estimates and assumptions, especially with respect to the timing of future redemptions and discount rates.
MANDATORILY REDEEMABLE NON-CONTROLLING INTEREST Mandatorily redeemable non-controlling interest represents the non-controlling interest in the Company’s strategic investment in Team Sledd. NATURE OF ESTIMATES REQUIRED . We record the mandatorily redeemable non-controlling interest at fair value. This valuation requires management to make significant estimates and assumptions, especially with respect to the timing of future redemptions and discount rates.
In order to estimate our reserve for incurred but unreported claims we consider the following key factors: Employee Health Insurance Claims ● Historical claims experience—We review loss runs for each month to calculate the average monthly claims experience. ● Lag period for reporting claims—Based on our analysis, our experience is such that we have a minimum of a one-month lag period in which claims are reported.
In order to estimate our reserve for incurred but unreported employee health care claims we consider the following key factors: ● Historical claims experience—We review loss runs for each month to calculate the average monthly claims experience. ● Lag period for reporting claims—Based on our analysis, our experience is such that we have a minimum of a one-month lag period in which claims are reported.
(2) Calculated based on rounded numbers as presented in the table. 21 Table of Contents SALES Changes in sales are primarily driven by: (i) changes to selling prices, which are largely controlled by our product suppliers, and excise taxes imposed on cigarettes and tobacco products by various states; (ii) changes in the volume and mix of products sold to our customers, either due to a change in purchasing patterns resulting from consumer preferences or the fluctuation in the comparable number of business days in our reporting period; and (iii) acquisitions SALES—Fiscal 2023 vs.
(2) Calculated based on rounded numbers as presented in the table. 21 Table of Contents SALES Changes in sales are primarily driven by: (i) changes to selling prices, which are largely controlled by our product suppliers, and excise taxes imposed on cigarettes and tobacco products by various states; (ii) changes in the volume and mix of products sold to our customers, either due to a change in purchasing patterns resulting from shifting consumer preferences or the fluctuation in the comparable number of business days in our reporting period; and (iii) acquisitions SALES—Fiscal 2024 vs.
Fiscal 2022 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.
Fiscal 2023 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.
There were no such cross defaults for either Team Sledd or Henry’s at September 2023. 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.
There were no such cross defaults for either Team Sledd or Henry’s at September 2024. 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.
Fiscal 2022 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.
Fiscal 2023 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.
For the majority of our customer arrangements, control transfers to customers at a point-in-time when goods have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods and services transfers to the customer. Sales are shown net of returns, discounts, and sales incentives to customers. NATURE OF ESTIMATES REQUIRED.
For the majority of our customer arrangements, control transfers to customers at a point-in-time when goods have been 27 Table of Contents delivered, as that is generally when legal title, physical possession and risks and rewards of goods and services transfers to the customer. Sales are shown net of returns, discounts, and sales incentives to customers. NATURE OF ESTIMATES REQUIRED.
The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and 24 Table of Contents liabilities that are not readily apparent from other sources.
The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
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 $44.5 million during fiscal 2023 as compared to fiscal 2022.
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 $11.5 million during fiscal 2024 as compared to fiscal 2023.
ASSUMPTIONS AND APPROACH USED . Critical estimates in valuing the mandatorily redeemable non-controlling interest include but are not limited to the projected growth factors, future expected cash flows, discount rates, potential competitive and regulatory environment developments, and changes in the market for the Company’s products and 28 Table of Contents services.
ASSUMPTIONS AND APPROACH USED . Critical estimates in valuing the mandatorily redeemable non-controlling interest include but are not limited to the projected growth factors, future expected cash flows, discount rates, potential competitive and regulatory environment developments, and changes in the market for the Company’s products and services.
The Company determined that the estimated fair value of its wholesale reporting unit exceeded its carrying value at both September 2023 and September 2022. INSURANCE The Company’s insurance for workers’ compensation, general liability and employee-related health care benefits are provided through high-deductible or self-insured programs.
The Company determined that the estimated fair value of its wholesale reporting unit exceeded its carrying value at both September 2024 and September 2023. INSURANCE The Company’s insurance for employee-related health care benefits, workers’ compensation, and general liability is provided through high-deductible or self-insured programs.
ALLOWANCE FOR DOUBTFUL ACCOUNTS NATURE OF ESTIMATES REQUIRED. The allowance for doubtful accounts represents our estimate of uncollectible accounts receivable at the balance sheet date. We monitor our credit exposure on a daily basis and regularly assess the adequacy of our allowance for doubtful accounts.
ALLOWANCE FOR EXPECTED CREDIT LOSSES NATURE OF ESTIMATES REQUIRED. The allowance for expected credit losses represents our estimate of uncollectible accounts receivable at the balance sheet date. We monitor our credit exposure on a daily basis and regularly assess the adequacy of our allowance for expected credit losses.
Fiscal 2022 The change in the fiscal 2023 income tax rate as compared to fiscal 2022 was primarily related to non-deductible compensation expense in relation to the amount of income from operations before income tax expense and higher effective state income tax rates between the comparative periods. ​ Liquidity and Capital Resources The Company’s variability in cash flows from operating activities is dependent on the timing of inventory purchases and seasonal fluctuations.
Fiscal 2023 The change in the Company’s effective tax rate during fiscal 2024 as compared to fiscal 2023 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. ​ Liquidity and Capital Resources The Company’s variability in cash flows from operating activities is dependent on the timing of inventory purchases and seasonal fluctuations.
At September 2023, the Facilities have a total combined borrowing capacity of $300.0 million, which includes 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.
At September 2024, the Facilities have a total combined borrowing capacity of $300.0 million, which includes provisions for up to $30.0 million in credit advances for certain inventory purchases, which are limited by accounts receivable and 23 Table of Contents inventory qualifications, and the value of certain real estate collateral.
The use of different assumptions or estimates for future cash flows could produce different results. Goodwill recorded on the Company’s consolidated balance sheet represents amounts allocated to its wholesale reporting unit which totaled $5.8 million and $5.3 million at September 2023 and September 2022, respectively.
The use of different assumptions or estimates for future cash flows could produce different results. Goodwill recorded on the Company’s consolidated balance sheet represents amounts allocated to its wholesale reporting unit which totaled $5.8 million at both September 2024 and September 2023.
We estimate our required allowance for doubtful accounts using the following key assumptions: ● Historical collections—Represented as the amount of historical uncollectible accounts as a percent of total accounts receivable. ● Specific credit exposure on certain accounts—Identified based on management’s review of the accounts receivable portfolio and taking into account the financial wherewithal of particular customers that management deems to have a higher risk of collection. ● Market conditions—We consider a broad range of industry trends and macro-economic issues which may impact the creditworthiness of our customers.
We estimate our required allowance for expected credit losses using the following key assumptions: ● Historical collections—Represented as the amount of historical uncollectible accounts as a percent of total accounts receivable. ● Specific credit exposure on certain accounts—Identified based on management’s review of the accounts receivable portfolio and taking into account the financial wherewithal of particular customers that management deems to have a higher risk of collection. ● Market conditions—We consider a broad range of industry trends and macro-economic issues which help formulate reasonable and supportable forecasts and also may impact the creditworthiness of our customers.
Due to the uncertainty involved with the realization of claims incurred but unreported, management is required to make estimates of these claims. 26 Table of Contents ASSUMPTIONS AND APPROACH USED.
Due to the uncertainty involved with claims activity and the realization of claims incurred but unreported, management is required to make estimates of these claims. ASSUMPTIONS AND APPROACH USED.
The Company and its subsidiaries, including Team Sledd and Henry’s, were in compliance with all of the financial covenants under the Facilities at September 2023. Dividend Payments The Company paid cash dividends of $3.5 million and $3.4 million, or $5.72 per common share, during fiscal 2023 and fiscal 2022, respectively.
The Company and its subsidiaries, including Team Sledd and Henry’s, were in compliance with all of the financial covenants under the Facilities at September 2024. Dividend Payments The Company paid cash dividends of $0.6 million, or $1.00 per common share, and $3.5 million, or $5.72 per common share, during fiscal 2024 and fiscal 2023, respectively.
This guidance is effective for fiscal years beginning after December 15, 2022 (fiscal 2024 for the Company) with early adoption permitted.
This guidance is effective for annual periods beginning after December 15, 2024 (fiscal 2026 for the Company), with early adoption permitted.
Impairment of the Company’s long-lived assets is assessed during the Company’s fourth fiscal quarter using both qualitative and quantitative analysis, or whenever events or circumstances change that indicate the carrying value of such long-lived assets may not be recoverable. NATURE OF ESTIMATES REQUIRED. Management has to estimate the useful lives of the Company’s long-lived assets.
Indefinite-lived intangible assets and goodwill are not amortized. Impairment of the Company’s long-lived assets is assessed during the Company’s fourth fiscal quarter using both qualitative and quantitative analysis, or whenever events or circumstances change that indicate the carrying value of such long-lived assets may not be recoverable. NATURE OF ESTIMATES REQUIRED.
The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses.
The estimate of expected credit losses requires entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. The Company adopted ASU 2016-13 on October 1, 2023.
The Company does not expect the adoption of ASU 2016-13 to have a material effect on its consolidated financial statements. ​ FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K, including 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 which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results.
The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements. ​ FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K, including 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 which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results.
Our most significant expenses relate to costs associated with employees, facility and equipment leases, transportation, fuel, and insurance. 22 Table of Contents Our fiscal 2023 consolidated operating expenses increased $39.8 million as compared to fiscal 2022.
Our most significant expenses relate to costs associated with employees, facility and equipment leases, transportation, fuel, and insurance. Our fiscal 2024 consolidated operating expenses increased $19.5 million as compared to fiscal 2023.
Based on the collateral and loan limits as defined in the Facility agreements, the credit limit of the combined Facilities at September 2023 was $239.1 million, of which $140.4 million was outstanding, leaving $98.7 million available. The average interest rate of the Facilities was 7.03% at September 2023.
Based on the collateral and loan limits as defined in the Facility agreements, the credit limit of the combined Facilities at September 2024 was $212.4 million, of which $121.3 million was outstanding, leaving $91.1 million available. The average interest rate of the Facilities was 6.82% at September 2024.
As a result, we estimate either the net realizable value or the LCM of this inventory as if it were to be liquidated. ● Estimated net realizable value—For our wholesale business, the net realizable value of the inventory is estimated using management’s evaluation of the congestion in the distribution channels and experience with brokers and inventory liquidators to determine the net realizable value of the inventory. 25 Table of Contents DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL AND LEASED RIGHT-OF-USE ASSETS Long-lived assets consist primarily of property and equipment, leased right-of-use (“ROU”) assets, intangible assets, and goodwill acquired in business combinations.
As a result, we estimate either the net realizable value or the LCM of this inventory as if it were to be liquidated. 25 Table of Contents ● Estimated net realizable value—For our wholesale business, the net realizable value of the inventory is estimated using management’s evaluation of the congestion in the distribution channels and experience with brokers and inventory liquidators to determine the net realizable value of the inventory.
These incentives totaled $40.4 million and $34.4 million in fiscal 2023 and fiscal 2022, respectively.
These incentives totaled $41.1 million and $40.4 million in fiscal 2024 and fiscal 2023, respectively.
Gross profit in our Retail Segment decreased $1.4 million in fiscal 2023 as compared to fiscal 2022.
Gross profit in our Retail Segment increased $0.1 million in fiscal 2024 as compared to fiscal 2023.
(“Henry’s") during Q2 2023, a $97.3 million increase in sales related to price increases implemented by cigarette manufacturers, and a $27.8 million increase in sales related to higher sales volumes in our tobacco, confectionary, foodservice, and other categories (“Other Products”), partially offset by a $175.8 million decrease in sales related to the volume and mix of cigarette cartons sold. ​ Sales in our Retail Segment decreased $3.1 million in fiscal 2023 as compared to fiscal 2022.
(“Henry’s") during Q2 2023, a $98.6 million increase in sales related to the combined acquisitions of Burklund and Richmond Master during fiscal 2024, a $116.6 million increase in sales related to price increases implemented by cigarette manufacturers, and a $2.9 million increase in sales related to higher sales volumes in our tobacco, confectionary, foodservice, and other categories (“Other Products”), partially offset by a $149.6 million decrease in sales related to the volume and mix of cigarette cartons sold. ​ Sales in our Retail Segment decreased $0.6 million in fiscal 2024 as compared to fiscal 2023.
In determining the estimated useful life of ROU assets and amortizable intangible assets such as customer lists, we rely on our historical experience in addition to estimates of how long certain assets will generate cash flows.
For property and equipment, depreciable lives are based on our accounting policy which is intended to mirror the expected useful life of the asset. In determining the estimated useful life of ROU assets and amortizable intangible assets such as customer lists, we rely on our historical experience in addition to estimates of how long certain assets will generate cash flows.
Significant items impacting gross profit during fiscal 2023 included a $25.4 million increase in gross profit related to the acquisition of Henry’s in Q2 2023, a $20.8 million increase in comparative gross profit related to the acquisition of a controlling interest in Team Sledd during Q3 2022, a $1.0 million increase in gross profit related to higher sales volumes and promotions in our Other Products category, partially offset by a $1.9 million decrease in the net impact of cigarette manufacturer promotions and the volume and mix of cigarette cartons sold and a $0.8 million decrease in gross profit due to the timing and related benefits of cigarette manufacturer price increases between the comparative periods.
Significant items impacting gross profit during fiscal 2024 included an $11.9 million increase in comparative gross profit related to the acquisition of Henry’s in Q2 2023, a $5.1 million increase in gross profit related to the combined acquisitions of Burklund and Richmond Master during fiscal 2024, and a $0.1 million increase in gross profit due to the timing and related benefits of cigarette manufacturer price increases between the comparative periods, partially offset by a $5.3 million decrease in gross profit related to the mix of volumes and promotions in our Other Products category and a $0.3 million decrease in gross profit related to the volume and mix of cigarette cartons sold between the comparative periods.
Borrowings under the Facilities bear interest at either the bank’s prime rate or the Secured Overnight Financing Rate (“SOFR”), plus any applicable spreads. 23 Table of Contents 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.
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.
Significant items impacting operating expenses during fiscal 2023 included a $20.3 million increase in operating expenses related to the acquisition of Henry’s during Q2 2023, a $16.0 million increase in operating expenses related to the acquisition of a controlling interest in Team Sledd during Q3 2022, a $2.4 million increase in other Wholesale Segment operating expenses including employee compensation and benefit costs, and a $2.0 million increase in insurance costs, partially offset by a $0.7 million decrease in fuel costs, a $0.1 million decrease in our customer bad debt expense and a $0.1 million decrease in our Retail Segment operating expenses.
Significant items impacting operating expenses during fiscal 2024 included a $10.6 million increase in operating expenses related to the acquisition of Henry’s during Q2 2023, a $4.5 million increase related to the combined acquisitions of Burklund and Richmond Master during fiscal 2024, a $3.2 million increase related to employee compensation and benefit costs, a $1.3 million increase in insurance costs and a $0.6 million increase in other Wholesale Segment operating expenses, partially offset by a $0.7 million decrease in our Retail Segment operating expenses.
During fiscal 2023, the peak borrowings under the Facilities was $159.7 million, and the average borrowings and average availability under the Facilities was $124.3 million and $86.4 million, respectively. Cross Default and Co-Terminus Provisions Team Sledd’s three notes payable and the Team Sledd Facility contain cross default provisions. The Henry’s note payable and the Henry’s Facility contain cross default provisions.
During fiscal 2024, the peak borrowings under the Facilities was $181.8 million, and the average borrowings and average availability under the Facilities was $134.5 million and $81.0 million, respectively. Cross Default and Co-Terminus Provisions Team Sledd’s two notes payable and the Team Sledd Facility contain cross default provisions. The Henry’s note payable and the Henry’s Facility contain cross default provisions.
INTEREST EXPENSE — Fiscal 2023 vs. Fiscal 2022 Interest expense increased $6.3 million during fiscal 2023 as compared to fiscal 2022, primarily related to higher interest rates and higher outstanding debt balances in the current year period related to the acquisition of a controlling interest in Team Sledd in Q3 2022 and the acquisition of Henry’s in Q2 2023.
INTEREST EXPENSE — Fiscal 2024 vs. Fiscal 2023 Interest expense increased $1.9 million during fiscal 2024 as compared to fiscal 2023, primarily related to higher interest rates, increased capital expenditures, and higher outstanding debt balances in the current year period related to the acquisitions of Burklund and Richmond Master in fiscal 2024 and the acquisition of Henry’s in Q2 2023.
ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements ​ In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables.
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. ​ 28 Table of Contents ACCOUNTING PRONOUNCEMENTS ​ Recently Adopted Accounting Pronouncements ​ In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables.
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.
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.
In making that estimate we consider the following key factors: ● our current financial position; ● historical financial information; ● future reversals of existing taxable temporary differences; ● future taxable income exclusive of reversing temporary differences and carryforwards; ● taxable income in prior carryback years; and ● tax planning strategies. 27 Table of Contents REVENUE RECOGNITION We recognize revenue in both our Wholesale Segment and our Retail Segment when the performance obligation is satisfied, which is the point at which control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods and services.
REVENUE RECOGNITION We recognize revenue in both our Wholesale Segment and our Retail Segment when the performance obligation is satisfied, which is the point at which control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods and services.
If such regulations were to be implemented, they would have a negative impact on the Company’s financial results. ​ 20 Table of Contents Results of Operations The following table sets forth an analysis of various components of the Company’s Statement of Operations as a percentage of sales for fiscal years 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Years ​ 2023 2022 Sales 100.0 % 100.0 % Cost of sales 93.3 ​ 93.6 ​ Gross profit 6.7 ​ 6.4 ​ Selling, general and administrative expenses 5.4 ​ 5.1 ​ Depreciation and amortization 0.3 ​ 0.2 ​ Operating income 1.0 ​ 1.1 ​ Interest expense 0.3 ​ 0.1 ​ Change in fair value of mandatorily redeemable non-controlling interest ​ 0.1 ​ 0.1 ​ Other (income), net ​ (0.1) ​ (0.1) ​ Income from operations before income taxes 0.7 ​ 1.0 ​ Income tax expense 0.2 ​ 0.3 ​ Equity method investment earnings, net of tax — ​ 0.1 ​ Net income available to common shareholders 0.5 % 0.8 % ​ The following table presents selected statement of operations data for fiscal years 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) 2023 2022 Incr (Decr) (2) CONSOLIDATED: ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales(1) ​ $ 2,540.0 ​ $ 2,010.8 ​ $ 529.2 Cost of sales ​ ​ 2,369.2 ​ ​ 1,883.1 ​ ​ 486.1 Gross profit ​ ​ 170.8 ​ ​ 127.7 ​ ​ 43.1 Gross profit percentage ​ ​ 6.7 % ​ 6.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expense ​ $ 144.9 ​ $ 105.1 ​ $ 39.8 Operating income ​ ​ 26.0 ​ ​ 22.6 ​ ​ 3.4 Interest expense ​ ​ 8.5 ​ ​ 2.2 ​ ​ 6.3 Change in fair value of mandatorily redeemable non-controlling interest ​ ​ 1.3 ​ ​ 1.5 ​ ​ (0.2) Income tax expense ​ ​ 5.7 ​ ​ 6.5 ​ ​ (0.8) Equity method investment earnings, net of tax ​ ​ — ​ ​ 1.7 ​ ​ (1.7) Net income available to common shareholders ​ ​ 11.6 ​ ​ 16.7 ​ ​ (5.1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BUSINESS SEGMENTS: ​ ​ ​ ​ ​ ​ ​ ​ ​ Wholesale ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 2,496.9 ​ $ 1,964.6 ​ $ 532.3 Gross profit ​ ​ 155.3 ​ ​ 110.8 ​ ​ 44.5 Gross profit percentage ​ ​ 6.2 % ​ 5.6 % ​ ​ Retail ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 43.1 ​ $ 46.2 ​ $ (3.1) Gross profit ​ 15.5 ​ 16.9 ​ (1.4) Gross profit percentage ​ 36.0 % 36.6 % ​ ​ ​ (1) Sales are reported net of costs associated with incentives provided to retailers.
These acquisitions will expand the Company’s regional footprint and provide customers with an enhanced range of products and services over time. ​ Lastly, the Company opened a new retail store under the Chamberlin’s Natural Foods banner in Lakewood Ranch, Florida. ​ 20 Table of Contents Results of Operations The following table sets forth an analysis of various components of the Company’s Statement of Operations as a percentage of sales for fiscal years 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Years ​ 2024 2023 Sales 100.0 % 100.0 % Cost of sales 93.3 ​ 93.3 ​ Gross profit 6.7 ​ 6.7 ​ Selling, general and administrative expenses 5.7 ​ 5.4 ​ Depreciation and amortization 0.3 ​ 0.3 ​ Operating income 0.7 ​ 1.0 ​ Interest expense 0.4 ​ 0.3 ​ Change in fair value of mandatorily redeemable non-controlling interest ​ — ​ 0.1 ​ Other (income), net ​ — ​ (0.1) ​ Income from operations before income taxes 0.3 ​ 0.7 ​ Income tax expense 0.1 ​ 0.2 ​ Net income available to common shareholders 0.2 % 0.5 % ​ The following table presents selected statement of operations data for fiscal years 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ($ in millions) 2024 2023 Incr (Decr) (2) CONSOLIDATED: ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales (1) ​ $ 2,711.0 ​ $ 2,540.0 ​ $ 171.0 Cost of sales ​ ​ 2,528.6 ​ ​ 2,369.2 ​ ​ 159.4 Gross profit ​ ​ 182.4 ​ ​ 170.8 ​ ​ 11.6 Gross profit percentage ​ ​ 6.7 % ​ 6.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expense ​ $ 164.4 ​ $ 144.9 ​ $ 19.5 Operating income ​ ​ 18.0 ​ ​ 26.0 ​ ​ (8.0) Interest expense ​ ​ 10.4 ​ ​ 8.5 ​ ​ 1.9 Change in fair value of mandatorily redeemable non-controlling interest ​ ​ 1.0 ​ ​ 1.3 ​ ​ (0.3) Income tax expense ​ ​ 3.1 ​ ​ 5.7 ​ ​ (2.6) Net income available to common shareholders ​ ​ 4.3 ​ ​ 11.6 ​ ​ (7.3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ BUSINESS SEGMENTS: ​ ​ ​ ​ ​ ​ ​ ​ ​ Wholesale ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 2,668.5 ​ $ 2,496.9 ​ $ 171.6 Gross profit ​ ​ 166.8 ​ ​ 155.3 ​ ​ 11.5 Gross profit percentage ​ ​ 6.3 % ​ 6.2 % ​ ​ Retail ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ $ 42.5 ​ $ 43.1 ​ $ (0.6) Gross profit ​ 15.6 ​ 15.5 ​ 0.1 Gross profit percentage ​ 36.7 % 36.0 % ​ ​ ​ (1) Sales are reported net of costs associated with incentives provided to retailers.
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 the 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.
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 the 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. 24 Table of Contents OTHER MATTERS—Critical Accounting Estimates GENERAL The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles, which require the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities.
In regard to the Company’s impairment analysis, the most significant assumptions include management’s estimate of the annual growth rate used to project future sales and expenses. ASSUMPTIONS AND APPROACH USED. For property and equipment, depreciable lives are based on our accounting policy which is intended to mirror the expected useful life of the asset.
Management has to estimate the useful lives of the Company’s long-lived assets. In regard to the Company’s impairment analysis, the most significant assumptions include management’s estimate of the annual growth rate used to project future sales and expenses. ASSUMPTIONS AND APPROACH USED.
Other The Company has issued a letter of credit for $0.5 million to its workers’ compensation insurance carrier as part of its self-insured loss control program. 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.
Other The Company has issued letters of credit to its workers’ compensation insurance carriers as part of its self-insured loss control program totaling $2.4 million and $0.5 million as of September 2024 and September 2023, respectively. Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements.
Property and equipment, ROU assets and amortizable identified intangible assets are assigned useful lives ranging from one to 40 years. Indefinite-lived intangible assets and goodwill are not amortized.
DEPRECIATION, AMORTIZATION AND IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL AND LEASED RIGHT-OF-USE ASSETS Long-lived assets consist primarily of property and equipment, leased right-of-use (“ROU”) assets, intangible assets, and goodwill acquired in business combinations. Property and equipment, ROU assets and amortizable identified intangible assets are assigned useful lives ranging from one to 40 years.
The following discussion and analysis includes the results of operations for the twelve month periods ended September 2023 and September 2022. For more information regarding our business segments, see Item 1 “Business” of this Annual Report. Business Update During fiscal year 2023, the Company acquired Henry’s Foods, Inc. (“Henry’s”) an Alexandria, Minnesota-based convenience distributor.
The following discussion and analysis includes the results of operations for the twelve month periods ended September 2024 and September 2023. For more information regarding our business segments, see Item 1 “Business” of this Annual Report. Business Update Our business continues to be impacted by macroeconomic factors and certain manufacturer supply chain limitations.
Significant items impacting sales during fiscal 2023 included a $362.4 million increase in comparative sales related to the acquisition of a controlling interest in Team Sledd, LLC (“Team Sledd”) during Q3 2022, a $220.6 million increase in sales related to the acquisition of Henry’s Foods, Inc.
Fiscal 2023 Sales in our Wholesale Segment increased $171.6 million during fiscal 2024 as compared to fiscal 2023. Significant items impacting sales during fiscal 2024 included a $103.1 million increase in comparative sales related to the acquisition of Henry’s Foods, Inc.
OTHER INCOME — Fiscal 2023 vs. Fiscal 2022 The change in other income between the comparative periods was primarily related to a non-cash accounting gain of approximately $2.4 million in fiscal 2022 related to the consolidation of Team Sledd, partially offset by an insurance recovery in fiscal 2023. INCOME TAX EXPENSE — Fiscal 2023 vs.
OTHER INCOME — Fiscal 2024 vs. Fiscal 2023 The change in other income was primarily related to differences in the amounts of insurance recoveries between the comparative periods. INCOME TAX EXPENSE — Fiscal 2024 vs.
Significant items impacting sales during fiscal 2023 included a $4.1 million decrease in sales volume related to store closures across the comparative periods, partially offset by a $1.0 million increase in sales related to higher sales volumes in our existing stores. ​ GROSS PROFIT—Fiscal 2023 vs.
This change was primarily due to a $5.5 million decrease related to the closure of five stores between the comparative periods, partially offset by a $2.4 million increase related to higher sales volumes in our existing stores, a $2.0 million increase related to the re-opening of our Port Charlotte store that was damaged during Hurricane Ian, and a $0.5 million increase related to the opening of our new Lakewood Ranch store. ​ GROSS PROFIT—Fiscal 2024 vs.
Combined with a persistently high inflationary operating environment, these factors have resulted in cost pressures across both of our business segments as product, labor, fuel, interest and other costs have all increased markedly while at the same time pressuring consumer demand trends. ​ Finally, we continue to monitor proposals from governmental and regulatory bodies, including the United States Food and Drug Administration (“FDA”), which are evaluating the possible prohibition and/or limitations on the sale of certain cigarette, tobacco and vaping products, including menthol.
We continue to closely monitor regulatory actions and proposals from federal and state governmental and regulatory bodies, including the United States Food and Drug Administration (“FDA”), which is evaluating the possible prohibition and/or limitations on the sale of certain cigarette, e-cigarette, tobacco, and vaping products, including menthol cigarettes.
This change was primarily related to a $1.2 million decrease related to store closures across the comparative periods and $0.2 million decrease related to lower gross margins in our existing stores resulting from variations in volume and product mix between the comparative periods. ​ OPERATING EXPENSE—Fiscal 2023 vs.
This change was primarily related to a $1.0 million increase in realized margins in our existing stores, a $0.7 million increase related to the re-opening of our Port Charlotte store that was damaged during Hurricane Ian, and a $0.3 million increase related to the opening of our new Lakewood Ranch store, partially offset by a $1.9 million decrease related to the closure of five stores between the comparative periods. ​ ​ 22 Table of Contents OPERATING EXPENSE—Fiscal 2024 vs.
The Facilities each feature an unused commitment fee and springing financial covenants.
The Facilities each feature an unused commitment fee and springing financial covenants. Borrowings under the Facilities bear interest at either the bank’s prime rate or the Secured Overnight Financing Rate (“SOFR”), plus any applicable spreads.
As a result, the Company accrues for its workers’ compensation liability based upon claim reserves established with the assistance of a third-party administrator, which are then trended and developed. The reserves are evaluated at the end of each reporting period.
The Company accrues for employee-related health care costs utilizing a claims reserve methodology and prepays insurance carriers for all workers’ compensation and general liability coverage as part of its insurance program. All claims activity and any related reserves are evaluated at the end of each 26 Table of Contents reporting period.
Removed
The acquisition of Henry’s expanded our geographic footprint and has provided access to an industry-leading foodservice distribution platform. Macroeconomic factors including ongoing disruptions to supply chains continue to impact product and equipment availability for our businesses.
Added
The cumulative effect of sustained inflation across various consumer product categories has impacted discretionary spending and the related retail level demand for the convenience store customers we serve. These same inflationary pressures have also increased our operating costs, particularly as it relates to labor, equipment, insurance, interest, and the cost of the products we sell.
Removed
Fiscal 2022 Sales in our Wholesale Segment increased $532.3 million during fiscal 2023 as compared to fiscal 2022.
Added
If such further regulations or further product sale limitations were to be implemented, they may limit the range of products we are able to sell in related product categories and decrease overall consumer demand. Any such changes may negatively impact our revenues, gross margins, and financial results.
Removed
In Q3 2023, the Company amended the Team Sledd Facility, increasing its aggregate borrowing capacity from $70.0 million to $80.0 million, extending the maturity date to March 2028, and adding certain real estate property as eligible borrowing collateral under the agreement.
Added
During fiscal year 2024, the Company continued to make targeted investments in conjunction with its long-term growth strategy. The Company purchased and is currently building out a 250,000 square foot distribution facility in Colorado City, Colorado, which will play a central role in the Company’s long-term geographic expansion initiatives.
Removed
OTHER MATTERS—Critical Accounting Estimates GENERAL The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles, which require the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities.
Added
In addition, the Company’s new 175,000 square foot distribution facility located in Springfield, Missouri became fully operational at the end of the fiscal period. This new facility will enhance our foodservice capabilities in that region. ​ The Company also acquired Burklund Distributors, Inc. (“Burklund”), a wholesale distributor based in East Peoria, Illinois and Richmond Master Distributors, Inc.
Removed
Workers’ Compensation Insurance Claims ● Historical claims experience—We review prior years’ loss runs to estimate the average annual expected claims and review monthly loss runs to compare our estimates to actual claims. ● Lag period for reporting claims—We review claims trends and use standard insurance industry loss models to develop reserves on reported claims in order to estimate the amount of incurred but unreported claims.
Added
(“Richmond Master”), a wholesale distributor based in South Bend, Indiana.
Removed
Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Added
The decrease in our Retail Segment was primarily due to a $2.8 million decrease related to the closure of five stores between the comparative periods, partially offset by an increase of $1.1 million in our existing stores, a $0.5 million increase related to the re-opening of our Port Charlotte store that was damaged during Hurricane Ian and a $0.5 million increase related to the opening of our new Lakewood Ranch store.
Added
Accordingly, significant price movements in these areas can and do impact the Company’s profitability.
Added
In making that estimate we consider the following key factors: ● our current financial position; ● historical financial information; ● future reversals of existing taxable temporary differences; ● future taxable income exclusive of reversing temporary differences and carryforwards; ● taxable income in prior carryback years; and ● tax planning strategies.
Added
The adoption of ASU 2016-13 did not have a material effect on the Company’s consolidated financial statements. ​ Recently Announced Accounting Pronouncements ​ In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
Added
This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation.
Added
This guidance is effective for fiscal years beginning after December 15, 2023 (fiscal 2025 for the Company), and interim periods within fiscal years beginning after December 15, 2024 (fiscal 2026 for the Company), with early adoption permitted.
Added
The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements. ​ In December 2023, the FASB issued 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.

Other DIT 10-K year-over-year comparisons