I am an enthusiastic equity research and investment analyst with a strong interest in applying my valuation and research skills. I am a certified FMVA (Financial Modeling & Valuation Analyst) and FPWMP (Financial Planning & Wealth Management Professional), credentials that have equipped me with the tools to analyze financial statements, build valuation models, and construct diversified investment portfolios. I participated in the CFA Research Challenge, where I gained practical experience in equity analysis ...

Core Insights - Investors favor businesses with consistent profitability, measured effectively by net profit margin, which indicates a company's efficiency in converting sales into profits [1][2] - Companies such as Chefs' Warehouse, Perdoceo Education, Adtalem Global Education, and Nomad Foods exhibit strong net profit margins, making them attractive to investors [1][8] Financial Metrics - Net profit margin is calculated as Net Profit/Sales * 100, representing the amount retained after all expenses [2] - A higher net profit margin not only attracts investors but also skilled employees, enhancing overall business value [3] Investment Considerations - A strong net profit margin provides clarity on a company's business model, including pricing, cost structure, and manufacturing efficiency, making it a preferred metric for investors [4] - However, net profit margin varies significantly across industries, and its relevance can diminish for companies that rely heavily on debt financing [5] Screening Criteria - The screening parameters for selecting stocks include a net margin of at least 0%, positive earnings per share (EPS) growth, and a strong broker rating [7] - Stocks like CHEF, PRDO, ATGE, and NOMD were selected based on their strong net margins and favorable EPS growth outlooks, each holding a Zacks Rank of 2 and a VGM Score of A [8] Company Performance - Chefs' Warehouse has seen its 2025 earnings estimate revised upward to $1.75 per share, with a historical average earnings surprise of 11.3% [10] - Perdoceo Education's 2025 earnings estimate increased to $2.52 per share, with an average earnings surprise of 6.2% [12] - Adtalem Global Education maintains a fiscal 2026 earnings estimate of $6.52 per share, with an average earnings surprise of 18.4% [13] - Nomad Foods' 2025 earnings estimate was revised upward to $2.13 per share, with an average earnings surprise of 3.2% [14]

Core Viewpoint - Growth stocks are appealing due to their above-average financial growth, but identifying stocks that can fulfill their potential is challenging due to associated risks and volatility [1] Group 1: Company Overview - Chefs' Warehouse (CHEF) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company operates in the specialty food distribution sector, which is currently experiencing promising growth metrics [3] Group 2: Earnings Growth - Chefs' Warehouse has a historical EPS growth rate of 19.3%, with projected EPS growth of 19% this year, significantly outperforming the industry average of 6.8% [5] - Earnings growth is a critical factor for growth investors, as double-digit growth is often seen as indicative of strong future prospects [4] Group 3: Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 17.7%, surpassing the industry average of 4.3% [6] - Historical cash flow growth has been strong, with an annualized rate of 16.9% over the past 3-5 years compared to the industry average of 4.2% [7] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Chefs' Warehouse, with the current-year earnings estimates increasing by 8% over the past month [9] - Positive earnings estimate revisions are correlated with near-term stock price movements, indicating potential for future growth [8] Group 5: Investment Potential - Chefs' Warehouse holds a Zacks Rank of 2 (Buy) and a Growth Score of A, suggesting it is a solid choice for growth investors [11]

Core Viewpoint - The article emphasizes the importance of identifying sustainable trends in short-term investing, highlighting that while price momentum can be profitable, ensuring its longevity is crucial for success [1][2]. Group 1: Investment Strategy - The "Recent Price Strength" screen is a tool designed to identify stocks with strong fundamentals that can maintain their upward price trends [3]. - Stocks that are trading in the upper portion of their 52-week high-low range are typically indicative of bullish sentiment [3]. Group 2: Company Analysis - Chefs' Warehouse (CHEF) - Chefs' Warehouse (CHEF) has shown a solid price increase of 9.1% over the past 12 weeks, indicating investor confidence in its potential [4]. - The stock has also increased by 5.4% over the last four weeks, suggesting that the upward trend is still intact [5]. - CHEF is currently trading at 95.4% of its 52-week high-low range, indicating a potential breakout [6]. Group 3: Ratings and Recommendations - CHEF holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting strong optimism from the brokerage community regarding its near-term performance [7]. - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 1988, underscoring the effectiveness of this rating system [7].

Core Insights - Chefs' Warehouse reported strong Q2 2025 results, with GAAP revenue of $1,034.9 million and Non-GAAP earnings per share of $0.52, exceeding analyst expectations [1][2] - The company modestly raised its full-year financial guidance, reflecting confidence in ongoing growth initiatives [1][10] Financial Performance - Q2 2025 Non-GAAP EPS was $0.52, up 30% year-over-year from $0.40 in Q2 2024 [2] - Revenue increased by 8.4% year-over-year, from $954.7 million in Q2 2024 to $1,034.9 million in Q2 2025 [2] - Net income rose to $21.2 million, a 36.8% increase from $15.5 million in Q2 2024 [2] - Adjusted EBITDA reached $65.4 million, up 16.4% from $56.2 million in the previous year [2] - Gross profit improved to $254.3 million, an 11.1% increase from $229.0 million in Q2 2024 [2] Business Model and Strategy - Chefs' Warehouse specializes in distributing high-end specialty foods, including proteins and kitchen staples, to fine-dining restaurants, hotels, and gourmet retailers [3] - The company offers over 88,000 unique products sourced from more than 4,000 suppliers globally, focusing on artisan and family-owned businesses [3] - Recent strategic initiatives include expanding the product catalog, investing in digital ordering systems, and enhancing supplier partnerships [4] Growth Drivers - Organic revenue growth was driven by increased demand for specialty foods, with a 3.5% increase in organic case count [5] - Unique customer relationships and product placements grew by 3.6% and 8.7%, respectively [5] - The exit from a low-margin commodity poultry program led to a 4.0% decline in organic pounds sold in that category, aligning with the company's focus on profitability [6] Profitability and Efficiency - Gross profit margin expanded by 59 basis points to 24.6%, with improved operating income as a percentage of revenue [7] - SG&A expenses rose by 9.7%, but higher profits from product mix and pricing contributed to stronger overall margins [7] - The company accelerated its online ordering system adoption, now handling approximately 58% of specialty customer orders in the US, up from 48% [8] Future Outlook - Management raised FY2025 revenue guidance to between $4.0 billion and $4.06 billion, with gross profit expectations of $964 million to $979 million [10] - Adjusted EBITDA is projected to be between $240 million and $250 million, reflecting strength in core categories and digital initiatives [10] - Key metrics to monitor include margin trends, SG&A expense ratios, and management of the company's $690 million long-term debt [11]

Core Viewpoint - Chefs' Warehouse (CHEF) has shown strong stock performance, with a 5.4% increase over the past month and a 35.7% gain since the beginning of the year, outperforming both the Zacks Consumer Staples sector and the Zacks Food - Miscellaneous industry [1][3]. Performance Metrics - The stock has consistently beaten earnings estimates, reporting an EPS of $0.52 against a consensus estimate of $0.45 in its last earnings report [2]. - For the current fiscal year, Chefs' Warehouse is projected to achieve earnings of $1.65 per share on revenues of $4.02 billion, reflecting a 12.24% increase in EPS and a 6.01% increase in revenues [3]. Valuation Metrics - Chefs' Warehouse has a Value Score of B, a Growth Score of A, and a Momentum Score of D, resulting in a combined VGM Score of A [6]. - The stock trades at 40.6 times the current fiscal year EPS estimates, significantly higher than the peer industry average of 16.4 times [7]. Zacks Rank - Chefs' Warehouse holds a Zacks Rank of 2 (Buy), supported by favorable earnings estimate revisions from analysts [8]. - The stock meets the criteria for selection based on Zacks Rank and Style Scores, indicating potential for further price appreciation in the near term [9].

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Unaudited Q2 2025 financials show total assets of **$1.91 billion**, liabilities of **$1.35 billion**, net sales of **$1.99 billion**, and net income of **$31.5 million** [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.907 billion** by June 27, 2025, with liabilities at **$1.350 billion** and stockholders' equity at **$557.7 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,907,254** | **$1,858,691** | | Total current assets | $883,447 | $868,043 | | Inventories | $367,905 | $316,014 | | Property and equipment, net | $310,792 | $275,781 | | **Total Liabilities** | **$1,349,536** | **$1,321,045** | | Total current liabilities | $439,871 | $425,396 | | Long-term debt, net | $690,223 | $688,744 | | **Total Stockholders' Equity** | **$557,718** | **$537,646** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Q2 2025 net sales grew **8.4%** to **$1.03 billion** and net income increased **36.8%** to **$21.2 million**, with diluted EPS at **$0.49** Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Thirteen Weeks Ended June 27, 2025 | Thirteen Weeks Ended June 28, 2024 | | :--- | :--- | :--- | | Net sales | $1,034,906 | $954,704 | | Gross profit | $254,339 | $229,002 | | Operating income | $40,216 | $33,867 | | Net income | $21,241 | $15,524 | | Diluted EPS | $0.49 | $0.37 | YTD 2025 vs YTD 2024 Performance (in thousands, except per share data) | Metric | Twenty-Six Weeks Ended June 27, 2025 | Twenty-Six Weeks Ended June 28, 2024 | | :--- | :--- | :--- | | Net sales | $1,985,654 | $1,829,192 | | Gross profit | $480,334 | $438,438 | | Operating income | $62,951 | $49,870 | | Net income | $31,529 | $17,455 | | Diluted EPS | $0.74 | $0.44 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) YTD 2025 net cash from operations was **$64.1 million**, with **$22.3 million** used in investing and **$59.6 million** in financing, ending with **$96.9 million** cash Cash Flow Summary (in thousands) | Cash Flow Category | Twenty-Six Weeks Ended June 27, 2025 | Twenty-Six Weeks Ended June 28, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $64,069 | $60,226 | | Net cash used in investing activities | ($22,325) | ($33,438) | | Net cash used in financing activities | ($59,645) | ($38,363) | | **Net change in cash and cash equivalents** | **($17,789)** | **($11,538)** | - Key uses of cash in financing activities included **$20.0 million** in payments on the asset-based loan facility, **$11.5 million** in other debt payments, **$10.0 million** for common stock repurchases, and **$11.6 million** for taxes on vested equity awards[23](index=23&type=chunk)[91](index=91&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revealing Specialty products as **61.9%** of sales, total debt at **$709.3 million**, and a **24.9%** effective tax rate Net Sales by Product Category (YTD 2025) | Category | Net Sales (in thousands) | % of Total | | :--- | :--- | :--- | | Center-of-the-Plate | $755,819 | 38.1% | | Total Specialty | $1,229,835 | 61.9% | | **Total net sales** | **$1,985,654** | **100.0%** | - Total debt obligations stood at **$709.3 million** as of June 27, 2025, consisting mainly of senior secured term loans (**$253.5M**), convertible senior notes (**$287.5M**), and borrowings on the asset-based loan facility (**$100.0M**)[48](index=48&type=chunk) - The company's share repurchase program, announced in November 2023 for up to **$100 million**, had a remaining authorization of **$72.6 million** as of June 27, 2025[58](index=58&type=chunk) - The effective tax rate for the twenty-six weeks ended June 27, 2025 was **24.9%**, down from **30.0%** in the prior-year period, reflecting the estimated annual rate adjusted for a discrete tax benefit from vested stock awards[59](index=59&type=chunk)[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q2 2025 net sales grew **8.4%** due to organic growth and inflation, with gross profit margin expanding to **24.6%** and strong liquidity [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Q2 2025 net sales rose **8.4%** to **$1.03 billion** from organic growth and inflation, with gross profit margin at **24.6%** Q2 2025 vs Q2 2024 Key Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,034.9M | $954.7M | +8.4% | | Gross Profit | $254.3M | $229.0M | +11.1% | | Gross Profit Margin | 24.6% | 24.0% | +59 bps | | SG&A as % of Sales | 20.7% | 20.4% | +30 bps | - Q2 sales growth was driven by a **3.6%** increase in unique specialty customers and an **8.7%** increase in placements, coupled with estimated inflation of **5.0%** in specialty and **10.8%** in center-of-the-plate categories[71](index=71&type=chunk) - Interest expense for Q2 decreased by **8.3%** to **$10.7 million** due to lower debt levels and interest rates compared to the prior year[75](index=75&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong with **$96.9 million** cash and **$163.4 million** ABL availability, with projected FY25 capital expenditures of **$40-50 million** Liquidity Position (in thousands) | Metric | June 27, 2025 | December 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $96,866 | $114,655 | | Working capital (ex-cash) | $346,710 | $327,992 | | Availability under ABL facility | $163,388 | $146,674 | - During the first twenty-six weeks of 2025, the company repurchased **159,982 shares** of common stock at an average price of **$62.51** per share[87](index=87&type=chunk) - Projected capital expenditures for fiscal 2025 are estimated to be between **$40.0 million** and **$50.0 million**[88](index=88&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risk is interest rate fluctuations on **$353.5 million** variable-rate debt, with a **100 basis point** increase reducing after-tax earnings by **$2.5 million** - The company has **$353.5 million** in variable-rate debt outstanding as of June 27, 2025[93](index=93&type=chunk) - A **100 basis point** increase in market interest rates would decrease after-tax earnings by approximately **$2.5 million** per year[93](index=93&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of June 27, 2025, with no material changes to internal financial reporting controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[94](index=94&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 27, 2025[95](index=95&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to materially affect the company's financial statements - The company states that ongoing legal proceedings are not expected to have a material adverse effect on its financial statements[96](index=96&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K[97](index=97&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Q2 2025 saw **163,790 shares** repurchased at **$62.44** per share, with **$72.6 million** remaining in the repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Repurchased | Average Price Paid Per Share | Shares Purchased Under Program | Remaining Authorization (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Total** | **163,790** | **$62.44** | **159,982** | **$72,617** | - The share repurchase program, announced in November 2023, authorizes up to **$100 million** in repurchases over two years[99](index=99&type=chunk) [Item 5. Other Information](index=24&type=section&id=Item%205.%20Other%20Information) No new Rule 10b5-1 trading arrangements were adopted by directors or officers, but a pre-existing plan for the Chief Accounting Officer became effective - A Rule 10b5-1 trading plan for Chief Accounting Officer Timothy McCauley, adopted on March 13, 2025, to sell up to **25,000 shares**, became effective during the quarter[102](index=102&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) Filed exhibits include the Thirteenth Amendment to the Credit Agreement and Sarbanes-Oxley certifications - Filed exhibits include the Thirteenth Amendment to the Credit Agreement and Sarbanes-Oxley certifications[103](index=103&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides a high-level overview of the company, CEO commentary on performance, and key financial highlights for the second quarter of fiscal 2025 [Company Overview](index=1&type=section&id=Company%20Overview) The Chefs' Warehouse, Inc. is a premier distributor of specialty food products across the United States, the Middle East, and Canada, serving high-end culinary establishments - The Chefs' Warehouse, Inc. (NASDAQ: CHEF) is a premier distributor of specialty food products in the United States, the Middle East, and Canada[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Christopher Pappas noted typical seasonality with improved revenue and profitability, strong unit volume, unique item placement growth, and effective pricing. The company also achieved its fourth consecutive 'Great Place to Work' certification - Second quarter business activity displayed typical seasonality as revenue and profitability improved across the network[3](index=3&type=chunk) - Operating divisions delivered **strong unit volume** and unique item placement growth and managed pricing effectively[3](index=3&type=chunk) - Chefs' Warehouse achieved the 'Great Place to Work' certification for the fourth consecutive year, recognizing its unique culture and focus on people[3](index=3&type=chunk) [Second Quarter Fiscal 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Financial%20Highlights) The company reported significant year-over-year increases in net sales, GAAP net income, adjusted net income per share, and adjusted EBITDA for the second quarter of 2025 Second Quarter Fiscal 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------------- | :---------- | :---------- | :--------- | | Net sales | $1,034.9 million | $954.7 million | 8.4% | | GAAP net income | $21.2 million | $15.5 million | 36.8% | | GAAP diluted EPS | $0.49 | $0.37 | 32.4% | | Adjusted net income per share | $0.52 | $0.40 | 30.0% | | Adjusted EBITDA | $65.4 million | $56.2 million | 16.4% | [Second Quarter Fiscal 2025 Detailed Financial Results](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Detailed%20Financial%20Results) This section presents a comprehensive analysis of the company's financial performance for the second quarter of fiscal 2025, covering net sales, gross profit, operating expenses, and profitability metrics [Net Sales](index=1&type=section&id=Net%20Sales) Net sales for Q2 2025 increased by 8.4% year-over-year, driven by organic case count growth in the specialty category, despite a decrease in center-of-the-plate organic pounds due to the exit of a non-core poultry program Net Sales (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------- | :---------- | :---------- | :--------- | | Net sales | $1,034.9 million | $954.7 million | 8.4% | - Organic case count in the specialty category increased approximately **3.5%**, with unique customer and placement increases of **3.6%** and **8.7%** respectively[4](index=4&type=chunk) - Organic pounds sold in the center-of-the-plate category decreased approximately **4.0%** primarily due to the exit of a non-core commodity poultry program[4](index=4&type=chunk) [Gross Profit](index=1&type=section&id=Gross%20Profit) Gross profit increased by 11.1% year-over-year, with gross profit margins improving by 59 basis points to 24.6%, primarily driven by increased sales and price inflation across both specialty and center-of-the-plate categories Gross Profit (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--------- | :---------- | :---------- | :--------- | | Gross profit | $254.3 million | $229.0 million | 11.1% | | Gross profit margins | 24.6% | 24.01% | +59 bps | - Gross profit margins increased **59 basis points** in the Company's specialty category and increased **56 basis points** in the center-of-the-plate category[5](index=5&type=chunk) [Selling, General and Administrative Expenses (SG&A)](index=1&type=section&id=Selling,%20General%20and%20Administrative%20Expenses%20(SG%26A)) SG&A expenses rose by 9.7% in Q2 2025, primarily due to higher compensation and benefits supporting sales growth, increased depreciation from facility and fleet investments, and higher self-insurance costs. As a percentage of net sales, SG&A slightly increased SG&A Expenses (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :------------------------------------ | :---------- | :---------- | :--------- | | SG&A expenses | $213.8 million | $194.8 million | 9.7% | | SG&A as a percentage of net sales | 20.7% | 20.4% | +0.3% | - The increase was primarily due to higher costs associated with compensation and benefits to support sales growth, higher depreciation driven by facility and fleet investments and higher self-insurance costs[6](index=6&type=chunk) [Operating Income](index=2&type=section&id=Operating%20Income) Operating income for Q2 2025 increased by $6.3 million, driven by higher gross profit, partially offset by increased SG&A expenses. Operating income as a percentage of net sales improved to 3.9% Operating Income (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change ($) | | :--------------- | :---------- | :---------- | :--------- | | Operating income | $40.2 million | $33.9 million | $6.3 million | | As % of net sales | 3.9% | 3.6% | +0.3% | [Net Income and EPS](index=2&type=section&id=Net%20Income%20and%20EPS) GAAP net income and diluted EPS saw substantial increases in Q2 2025 compared to the prior year, supported by improved operating performance and a lower effective tax rate GAAP Net Income and Diluted EPS (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :---------------- | :---------- | :---------- | :--------- | | Net income | $21.2 million | $15.5 million | 36.8% | | Diluted EPS | $0.49 | $0.37 | 32.4% | | Effective tax rate | 28.0% | 30.0% | -2.0% | [Adjusted EBITDA and Adjusted Net Income](index=2&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20Net%20Income) Adjusted EBITDA increased by 16.4% and adjusted net income per diluted share grew by 30.0% in Q2 2025, reflecting strong operational performance when excluding certain non-GAAP adjustments Adjusted EBITDA and Adjusted Net Income (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Adjusted EBITDA | $65.4 million | $56.2 million | 16.4% | | Adjusted net income | $22.5 million | $17.0 million | 32.4% | | Adjusted net income per diluted share | $0.52 | $0.40 | 30.0% | [Fiscal 2025 Guidance](index=2&type=section&id=Fiscal%202025%20Guidance) The company provided full-year fiscal 2025 financial guidance, projecting net sales between $4.0 billion and $4.06 billion, gross profit between $964 million and $979 million, and adjusted EBITDA between $240 million and $250 million Fiscal 2025 Full Year Guidance | Metric | Range (Low) | Range (High) | | :---------------- | :------------ | :------------- | | Net sales | $4.0 billion | $4.06 billion | | Gross profit | $964 million | $979 million | | Adjusted EBITDA | $240 million | $250 million | [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP financial measures such as EBITDA, Adjusted EBITDA, adjusted net income, and adjusted net income per share to offer additional metrics for evaluating operations and forecasted results, believing they provide a more comprehensive understanding of core operating performance when considered alongside GAAP results - EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per share are non-GAAP measures used to evaluate operations and forecasted results[11](index=11&type=chunk) - These measures provide a comparative assessment of operating performance relative to GAAP, isolating the effects of items that vary without correlation to core operating performance[11](index=11&type=chunk) - Non-GAAP financial measures should only be used as supplemental measures of operating performance and may not be comparable to similarly titled measures of other companies[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section highlights various risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including general economic conditions, intense competition, rising costs, supply chain disruptions, acquisition integration challenges, and regulatory changes - Statements in this press release that are not historical facts are 'forward-looking statements' involving risks and uncertainties, and actual results may differ materially[14](index=14&type=chunk) - Key risks include general economic conditions, low margins sensitive to inflationary/deflationary pressures, intense competition, rising costs for commodities, labor, and distribution, and the ability to integrate acquisitions[14](index=14&type=chunk) - Other factors such as product recalls, health concerns, regulatory changes, and information technology system failures also pose significant risks[14](index=14&type=chunk) [About The Chefs' Warehouse](index=4&type=section&id=About%20The%20Chefs'%20Warehouse) The Chefs' Warehouse, Inc. is a leading distributor of over 88,000 specialty food products to more than 50,000 customer locations across the United States, the Middle East, and Canada, primarily serving high-end culinary establishments - The Chefs' Warehouse, Inc. is a premier distributor of specialty food products in the United States, the Middle East and Canada[16](index=16&type=chunk) - The company focuses on serving the specific needs of chefs who own and/or operate leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, and other culinary businesses[16](index=16&type=chunk) - It carries and distributes more than **88,000 products** to over **50,000 customer locations**[16](index=16&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section includes the company's condensed consolidated statements of operations, balance sheets, and cash flows, providing a detailed view of its financial position and performance [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations demonstrate significant year-over-year growth in net sales, gross profit, operating income, and net income for both the thirteen and twenty-six weeks ended June 27, 2025 Condensed Consolidated Statements of Operations (Thirteen Weeks Ended) | Metric | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net sales | $1,034,906 | $954,704 | | Gross profit | $254,339 | $229,002 | | Selling, general and administrative expenses | $213,750 | $194,834 | | Operating income | $40,216 | $33,867 | | Net income | $21,241 | $15,524 | | Diluted Net income per share | $0.49 | $0.37 | Condensed Consolidated Statements of Operations (Twenty-Six Weeks Ended) | Metric | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net sales | $1,985,654 | $1,829,192 | | Gross profit | $480,334 | $438,438 | | Selling, general and administrative expenses | $416,513 | $385,155 | | Operating income | $62,951 | $49,870 | | Net income | $31,529 | $17,455 | | Diluted Net income per share | $0.74 | $0.44 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 27, 2025, shows an increase in total assets, primarily driven by growth in property and equipment and inventories, with a corresponding increase in total liabilities and stockholders' equity compared to December 27, 2024 Condensed Consolidated Balance Sheets (As of) | Asset/Liability/Equity | June 27, 2025 (in thousands) | December 27, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------- | | Cash and cash equivalents | $96,866 | $114,655 | | Total current assets | $883,447 | $868,043 | | Property and equipment, net | $310,792 | $275,781 | | Total assets | $1,907,254 | $1,858,691 | | Total current liabilities | $439,871 | $425,396 | | Long-term debt, net of current portion | $690,223 | $688,744 | | Total liabilities | $1,349,536 | $1,321,045 | | Stockholders' equity | $557,718 | $537,646 | | Total liabilities and stockholders' equity | $1,907,254 | $1,858,691 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the twenty-six weeks ended June 27, 2025, net cash provided by operating activities increased, while net cash used in investing activities decreased, and net cash used in financing activities significantly increased, resulting in a net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Twenty-Six Weeks Ended) | Cash Flow Activity | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $64,069 | $60,226 | | Net cash used in investing activities | $(22,325) | $(33,438) | | Net cash used in financing activities | $(59,645) | $(38,363) | | Net change in cash and cash equivalents | $(17,789) | $(11,538) | | Cash and cash equivalents at end of period | $96,866 | $38,340 | [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP net income to various non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and Adjusted Net Income, for both quarterly and year-to-date periods [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This section provides a detailed reconciliation of GAAP net income to EBITDA and Adjusted EBITDA for both the thirteen and twenty-six weeks, outlining specific adjustments for non-cash items like stock compensation, other operating expenses, duplicate rent, and moving expenses Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Thirteen Weeks Ended) | Metric | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | | Net income | $21,241 | $15,524 | | EBITDA | $59,313 | $49,575 | | Adjustments (total) | $6,134 | $6,605 | | Adjusted EBITDA | $65,447 | $56,180 | Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Twenty-Six Weeks Ended) | Metric | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | | Net income | $31,529 | $17,455 | | EBITDA | $100,386 | $80,983 | | Adjustments (total) | $12,544 | $15,357 | | Adjusted EBITDA | $112,930 | $96,340 | [Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income Per Share](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20Net%20Income%20Per%20Share) This reconciliation details the adjustments from GAAP net income to adjusted net income and adjusted net income per share, including other operating expenses, duplicate rent, moving expenses, debt modification costs, and their corresponding tax effects for both the thirteen and twenty-six week periods Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income Per Share (Thirteen Weeks Ended) | Metric | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net income | $21,241 | $15,524 | | Total adjustments | $1,291 | $1,489 | | Adjusted net income | $22,532 | $17,013 | | Diluted adjusted net income per common share | $0.52 | $0.40 | Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income Per Share (Twenty-Six Weeks Ended) | Metric | June 27, 2025 (in thousands) | June 28, 2024 (in thousands) | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net income | $31,529 | $17,455 | | Total adjustments | $1,176 | $5,421 | | Adjusted net income | $32,705 | $22,876 | | Diluted adjusted net income per common share | $0.76 | $0.55 | [Reconciliation of Adjusted EBITDA Guidance for Fiscal 2025](index=10&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20Guidance%20for%20Fiscal%202025) This section reconciles the fiscal 2025 adjusted EBITDA guidance from projected net income, incorporating adjustments for income tax expense, depreciation and amortization, interest expense, stock compensation, duplicate rent, and other operating expenses Reconciliation of Adjusted EBITDA Guidance for Fiscal 2025 | Metric | Low-End Guidance (in thousands) | High-End Guidance (in thousands) | | :-------------------------- | :------------------------------ | :------------------------------- | | Net income | $75,500 | $77,500 | | Provision for income tax expense | $28,000 | $30,000 | | Depreciation and amortization | $74,000 | $76,000 | | Interest expense | $42,000 | $44,000 | | EBITDA | $219,500 | $227,500 | | Adjustments (total) | $20,500 | $22,500 | | Adjusted EBITDA | $240,000 | $250,000 |

Financial Data and Key Metrics Changes - Net sales increased approximately 8.4% to $1,035 million from $954.7 million in the second quarter of 2024 [12] - Gross profit increased 11.1% to $254.3 million for 2025 compared to $229 million for 2024 [14] - GAAP net income was $21.2 million or $0.49 per diluted share for 2025 compared to $15.5 million or $0.37 per diluted share for 2024 [16] - Adjusted EBITDA for 2025 was $65.4 million compared to $56.2 million for the prior year [16] - Adjusted net income was $22.5 million or $0.52 per diluted share for 2025 compared to $17 million or $0.40 per diluted share for the prior year [17] Business Line Data and Key Metrics Changes - Specialty sales were up 8.7% over the prior year, driven by unique customer growth of approximately 3.6% and placement growth of 8.7% [9] - Center of the Plate pounds were approximately 4% lower than the prior year, but excluding the attrition related to the Texas commodity protein program, growth was 5.8% higher [10][36] - Gross profit margins increased approximately 59 basis points to 24.6% [14] Market Data and Key Metrics Changes - Net inflation was 7.2% in the second quarter, with 5% inflation in the specialty category and 10.8% in the center of the plate category [13] - Excluding the impact of attrition from the commodity poultry program, net inflation in the center of the plate category was 4.1% [13] Company Strategy and Development Direction - The company is focused on integrating Hardee's operations in Texas with its legacy operations to drive top-line and bottom-line improvements [8] - The company aims to create a $500 million CW business across Texas through cross-selling and expanding its customer base [71] - The company is exploring tuck-in acquisitions to utilize the capacity of its facilities while continuing to grow organically [77] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting that customers are generally resilient and the company is gaining market share [21][22] - The company raised its full-year guidance for 2025, estimating net sales in the range of $4 billion to $4.06 billion [19] - Management indicated that the second half of the year is expected to show typical seasonality with a projected 6% revenue growth [68] Other Important Information - The company achieved the Great Place to Work certification for the fourth consecutive year, highlighting its focus on people as its greatest asset [7] - Total liquidity at the end of the second quarter was $260.3 million, comprised of $96.9 million in cash and $163.4 million available under its ABL facility [18] Q&A Session Summary Question: Are there any pockets of weakness or elevated restaurant closures? - Management noted some choppiness but overall expressed satisfaction with market share gains and customer resilience [21][22] Question: Have you seen an uplift in business dining with the return to office policies? - Management indicated a net positive effect on lunch business in major cities but noted it is balanced with local market impacts [24][25] Question: How is summer travel impacting demand? - Management observed a good July, suggesting a rebalancing of tourism and local dining [30][32] Question: What should be expected regarding Hardee's planned attrition? - Management expects continued impacts on reported volume numbers but sees long-term profitability benefits from shedding low-margin programs [36][41] Question: What is the outlook for inflation in the second half? - Management indicated that aggregate inflation is expected to remain moderate, with potential unforeseen impacts from tariffs [47][60] Question: Can you elaborate on gross margin improvements? - Management acknowledged moving parts affecting gross margin but highlighted ongoing initiatives contributing to improvements [52][54] Question: What is the outlook for M&A activity? - Management remains opportunistic regarding M&A, looking for tuck-in acquisitions to complement organic growth [77] Question: Are the 2028 goals contributing to current results? - Management confirmed that several initiatives related to the 2028 goals are contributing positively to current performance [82]

Financial Data and Key Metrics Changes - Net sales increased by approximately 8.4% to $1,035 million from $954.7 million in Q2 2024 [10] - Gross profit increased by 11.1% to $254.3 million, with gross profit margins rising approximately 59 basis points to 24.6% [12] - GAAP net income was $21.2 million or $0.49 per diluted share, compared to $15.5 million or $0.37 per diluted share in Q2 2024 [13] - Adjusted EBITDA was $65.4 million for Q2 2025, up from $56.2 million in the prior year [14] Business Line Data and Key Metrics Changes - Specialty sales grew by 8.7% year-over-year, driven by unique customer growth of approximately 3.6% and placement growth of 8.7% [7] - Center of the Plate pounds were approximately 4% lower than the prior year, but excluding the impact of the Texas commodity protein program, growth was 5.8% [8][33] - Adjusted operating expenses increased by 9.3% year-over-year, representing 18.25% of net sales for Q2 2025 [13] Market Data and Key Metrics Changes - Net inflation was reported at 7.2%, with 5% inflation in the specialty category and 10.8% in the center of the plate category [11] - Excluding the impact of attrition from the commodity poultry program, net inflation in the center of the plate category was 4.1% [11] Company Strategy and Development Direction - The company is focused on integrating Hardee's operations in Texas with its legacy operations to drive top-line and bottom-line improvements [6] - The strategy includes shedding non-core programs to enhance distribution capacity and profitability [7][35] - The company aims to grow its business in Texas to over $500 million through cross-selling and expanding its customer base [70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the resilience of their customer base and the ability to gain market share despite industry challenges [19][20] - The company raised its full-year guidance for 2025, estimating net sales between $4 billion and $4.06 billion [17] - Management noted that the second half of the year is expected to show typical seasonality, with a projected 6% revenue growth [66] Other Important Information - The company achieved the Great Place to Work certification for the fourth consecutive year, highlighting its focus on employee culture [6] - Total liquidity at the end of Q2 was $260.3 million, including $96.9 million in cash [14] Q&A Session Summary Question: Are there any pockets of weakness or elevated restaurant closures? - Management noted some choppiness but overall expressed satisfaction with market share gains and customer resilience [19] Question: Have you seen an uplift in business dining with return to office policies? - Management indicated a net positive impact on lunch business in major cities but noted a balance with local markets [21] Question: How is summer travel impacting demand? - Management observed a good July, suggesting a rebalancing of tourism and restaurant spending [28][30] Question: What is the expected impact of Hardee's planned attrition on reported case growth? - Management expects continued impacts from the attrition, particularly in high-volume, low-margin programs [35][39] Question: What is the outlook for inflation in the second half? - Management indicated moderate inflation expectations, with potential unforeseen impacts from tariffs [46] Question: Can you elaborate on gross margin performance? - Management acknowledged moving parts affecting gross margin but highlighted improvements from various operational initiatives [52] Question: What is the outlook for M&A activity? - Management remains opportunistic regarding M&A, with ongoing evaluations of potential tuck-in acquisitions [72][75] Question: Are the 2028 goals contributing to current results? - Management confirmed that several initiatives related to the 2028 goals are contributing positively to current performance [80]