The Chefs' Warehouse, Inc. (NASDAQ:CHEF) Q2 2019 Earnings Conference Call July 31, 2019 5:00 PM ET Company Participants Alex Aldous - General Counsel, Corporate Secretary & Chief Government Relations Officer Chris Pappas - Founder, Chairman & CEO Jim Leddy - CFO Conference Call Participants Andy Wolf - Loop Capital Markets Kelly Bania - BMO Capital Markets Chris Mandeville - Jefferies Operator Greetings, and welcome to The Chefs' Warehouse second-quarter 2019 earnings conference call. As a reminder, this co ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number: 001-35249 | --- | --- | |-----------------------------------------------------------------------------|-------------------- ...

Financial Data and Key Metrics Changes - Net sales for Q1 2019 increased approximately 12.1% to $357 million from $318.6 million in Q1 2018, driven by organic growth of approximately 5.6% and acquisition contributions adding approximately 6.5% to sales growth [14][15] - Gross profit increased 13.4% to $90.2 million for Q1 2019 compared to $79.5 million for Q1 2018, with gross profit margins increasing approximately 30 basis points to 25.3% [15][20] - GAAP income was $1.1 million or $0.04 per diluted share for Q1 2019, compared to net income of $0.5 million or $0.02 per diluted share for Q1 2018 [20] Business Line Data and Key Metrics Changes - Specialty sales were up 6.6% organically over the prior year, driven by unique customer growth of approximately 6.2%, placement growth of 5.2%, and specialty case growth of 5.2% [8] - Organic pounds growth in center-of-the-plate was 3.1% [8] - Gross margins in the specialty category declined 39 basis points, while gross margins in the center-of-the-plate category increased 106 basis points year-over-year [9][15] Market Data and Key Metrics Changes - Net inflation was 1.3% in Q1 2019, consisting of 1.4% inflation in the specialty category and 1.3% in the center-of-the-plate category compared to the prior-year quarter [14] - Customer adoption of the e-commerce platform grew, with sales on e-commerce and mobile platforms representing more than 11% of total organic revenue [12] Company Strategy and Development Direction - The company executed a key acquisition of Bassian Farms, focusing on delivering high-quality natural, sustainable, local, and antibiotic-free center-of-the-plate products [10] - Continued progress on multiple systems and operational process improvements, including ERP platform conversions and facility expansions in Texas and Los Angeles [11][13] - The company is optimistic about the growth potential in Texas, viewing it as a long-term investment with significant future returns [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued strength in customer demand and execution by teams, despite challenging weather conditions [6][7] - The updated full-year guidance reflects improvement in expected gross profit dollar growth relative to adjusted operating expenses compared to 2018 [17][21] - Management anticipates that inflation will remain moderate, with expectations of 0% to 2% on the specialty side and flattish to 1% overall for the year [42] Other Important Information - The company ended Q1 2019 with $17.3 million in cash, and Moody's upgraded its corporate credit rating from B2 to B1 [20] - The company is focused on enhancing customer satisfaction through improved service levels and technology, which is expected to drive organic growth [55] Q&A Session Summary Question: Can you talk about the cadence of case growth in the quarter? - Management noted that the quarter was steady, with March being a strong month despite some weather-related challenges [24] Question: Can you elaborate on the gross margin changes? - Management explained that the decline in specialty margins was partly due to product mix from acquisitions and significant inflation in larger categories like cheese and baking [26][27] Question: How did fuel costs impact the company year-on-year in Q1? - Fuel costs were roughly flat year-over-year, with potential benefits expected in the second half of the year if prices stabilize [32] Question: What are the inflation expectations baked into the guidance for the year? - The guidance includes moderate inflation expectations of 0% to 2% on the specialty side and flattish to 1% overall [42] Question: How is the integration of Bassian Farms progressing? - Management reported a positive cultural fit and early synergies from combining production operations, with expectations for growth in the coming years [45][46]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Unaudited Q1 2019 consolidated financial statements show total assets at **$847.1 million** and liabilities at **$538.7 million** due to ASC 842 adoption, with net sales increasing to **$357.0 million** and net income reaching **$1.1 million** [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$847.1 million** and liabilities to **$538.7 million** as of March 29, 2019, primarily due to the **$118.8 million** recognition of operating lease right-of-use assets and **$127.6 million** in corresponding liabilities from ASC 842 adoption Consolidated Balance Sheet Highlights (in thousands) | Account | March 29, 2019 | December 28, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$847,112** | **$732,398** | | Cash and cash equivalents | $17,317 | $42,410 | | Operating lease right-of-use assets | $118,792 | $— | | Goodwill | $195,546 | $184,280 | | **Total Liabilities** | **$538,689** | **$423,722** | | Operating lease liabilities (Current & Long-term) | $127,639 | $— | | Long-term debt, net | $281,675 | $278,169 | | **Total Stockholders' Equity** | **$308,423** | **$308,676** | - The significant increase in assets and liabilities is primarily due to the adoption of the new lease accounting standard, ASC 842, which required the company to recognize right-of-use assets and corresponding lease liabilities on the balance sheet for operating leases[27](index=27&type=chunk)[29](index=29&type=chunk) [Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net sales increased 12.1% to **$357.0 million** for Q1 2019, with gross profit reaching **$90.2 million** and net income more than doubling to **$1.1 million** or **$0.04** per diluted share Statement of Operations Highlights (in thousands, except per share data) | Metric | Thirteen Weeks Ended Mar 29, 2019 | Thirteen Weeks Ended Mar 30, 2018 | | :--- | :--- | :--- | | Net Sales | $357,027 | $318,615 | | Gross Profit | $90,189 | $79,522 | | Operating Income | $6,150 | $5,740 | | Net Income | $1,134 | $544 | | Diluted EPS | $0.04 | $0.02 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was **$7.4 million**, while investing activities used **$32.1 million** primarily for acquisitions, leading to a **$25.1 million** decrease in cash and equivalents to **$17.3 million** Cash Flow Summary (in thousands) | Cash Flow Activity | Thirteen Weeks Ended Mar 29, 2019 | Thirteen Weeks Ended Mar 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,391 | $10,540 | | Net cash used in investing activities | ($32,115) | ($5,280) | | Net cash used in financing activities | ($367) | ($1,651) | | **Net (decrease) increase in cash** | **($25,093)** | **$3,570** | | **Cash at end of period** | **$17,317** | **$45,074** | - The primary use of cash in the quarter was for acquisitions, with **$28.0 million** paid, net of cash received[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail ASC 842 adoption, recognizing **$118.0 million** in ROU assets and **$126.3 million** in lease liabilities, the **$32.0 million** Bassian Farms acquisition, and **$283.5 million** in debt obligations - The company adopted the new lease accounting standard ASC 842 on December 29, 2018, resulting in the recognition of **$118.0 million** in Right-of-Use (ROU) assets and **$126.3 million** in lease liabilities for operating leases[27](index=27&type=chunk)[29](index=29&type=chunk) - On February 25, 2019, the company acquired Bassian Farms, Inc. for an aggregate purchase price of approximately **$32.0 million**, funded with cash and a convertible note, adding **$11.2 million** to goodwill[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) Net Sales by Product Category (in thousands) | Product Category | Q1 2019 Sales | % of Total | Q1 2018 Sales | % of Total | | :--- | :--- | :--- | :--- | :--- | | Center-of-the-Plate | $156,616 | 43.9% | $141,743 | 44.5% | | Dry Goods | $63,754 | 17.9% | $54,673 | 17.2% | | Pastry | $50,205 | 14.1% | $43,677 | 13.7% | | Other | $86,052 | 24.3% | $78,522 | 24.6% | | **Total** | **$357,027** | **100%** | **$318,615** | **100%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales increased 12.1% due to organic growth and acquisitions, gross margin improved to 25.3%, and liquidity is supported by **$90.0 million** available under the ABL Facility, with projected capital expenditures of **$24.0 million** to **$26.0 million** Q1 2019 vs Q1 2018 Performance | Metric | Q1 2019 | Q1 2018 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $357.0M | $318.6M | +12.1% | | Gross Profit | $90.2M | $79.5M | +13.4% | | Gross Margin | 25.3% | 25.0% | +30 bps | | Operating Income | $6.2M | $5.7M | +8.8% | | Net Income | $1.1M | $0.5M | +120% | - Sales growth was driven by a **5.6%** contribution from organic growth and **6.5%** from acquisitions, with organic growth supported by increased case count in specialty and pounds sold in center-of-the-plate categories[101](index=101&type=chunk) - The company projects capital expenditures for fiscal 2019 to be between **$24.0 million** and **$26.0 million**, an increase from 2018 due to planned facility expansions and renovations[121](index=121&type=chunk) - As of March 29, 2019, the company had **$90.0 million** available for borrowing under its Asset Based Loan (ABL) Facility[119](index=119&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) The company faces interest rate risk on **$283.9 million** in variable-rate debt, with a 100 basis point increase potentially decreasing annual after-tax earnings by **$2.1 million** - The company is exposed to interest rate risk from its **$283.9 million** in variable-rate debt under the Term Loan and ABL Facility[131](index=131&type=chunk) - A 100 basis point increase in interest rates would decrease annual after-tax earnings by approximately **$2.1 million**[131](index=131&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 29, 2019, with new internal controls implemented for ASC 842 adoption - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, March 29, 2019[132](index=132&type=chunk) - New internal controls were implemented to manage the adoption of the new lease accounting standard (ASC 842)[133](index=133&type=chunk) [PART II. OTHER INFORMATION](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to have a material adverse effect on the consolidated financial statements - The company states that ongoing legal proceedings are not expected to have a material adverse effect on its financial statements[135](index=135&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed 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[136](index=136&type=chunk) [Item 2. Issuer Purchases of Equity Securities](index=24&type=section&id=Item%202.%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased 24,002 shares at an average price of **$30.85** to satisfy tax withholding for restricted stock awards, not as part of a formal buyback program Share Repurchases in Q1 2019 | Period | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Feb 23 - Mar 29, 2019 | 24,002 | $30.85 | | **Total for Quarter** | **24,002** | **$30.85** | - The share repurchases were conducted to satisfy tax withholding obligations related to the vesting of employee restricted stock, not as part of a formal buyback program[138](index=138&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO Sarbanes-Oxley certifications and XBRL data files - Exhibits filed include Sarbanes-Oxley certifications from the CEO and CFO, along with XBRL instance documents for interactive data[143](index=143&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 28, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number: 001-35249 THE CHEFS' WAREHOUSE, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction ...

Chefs' Warehouse, Inc. (NASDAQ:CHEF) Q4 2018 Earnings Conference Call February 13, 2019 5:00 PM ET Company Participants Alex Aldous - General Counsel, Corporate Secretary and Chief Government Relations Officer Chris Pappas - Founder, Chairman and CEO Jim Leddy - CFO Conference Call Participants Andrew Wolf - Loop Capital Markets Kelly Bania - BMO Capital Markets Operator Greetings, and welcome to The Chefs' Warehouse Fourth Quarter 2018 Earnings Conference Call. As a reminder, this conference is being recor ...

W = "chefswarehouse Investor Presentation – January 2019 200 100 1 SAFE HARBOR STATEMENT Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this presentation regarding the business of The Chefs' Warehouse, Inc. (the "Company") that are not historical facts are "forward-looking statements" that involve risks and uncertainties and are based on current expectations and management estimates; actual results may differ materially. The risks and uncertainties which coul ...