Core Viewpoint - Chefs' Warehouse (CHEF) has shown strong year-to-date performance, significantly outperforming the Consumer Staples sector, which has seen negative returns. Group 1: Company Performance - Chefs' Warehouse has returned approximately 21.7% since the beginning of the calendar year [4] - The Zacks Consensus Estimate for CHEF's full-year earnings has increased by 8.6% over the past quarter, indicating improved analyst sentiment [3] - The stock currently holds a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook for future performance [3] Group 2: Sector Comparison - The Consumer Staples sector has an average return of -0.5% year-to-date, highlighting Chefs' Warehouse's superior performance within this group [4] - Another outperforming stock in the Consumer Staples sector is JAPAN TOB (JAPAY), which has increased by 47.9% year-to-date [4] - Chefs' Warehouse is part of the Food - Miscellaneous industry, which has seen an average loss of 14.5% this year, further emphasizing CHEF's strong performance [5]

Group 1 - The presentation is led by Brian Harbour from Morgan Stanley, focusing on the restaurant and food distribution sectors [1] - Chefs' Warehouse is highlighted as the main topic of discussion, with the presence of its Founder, Chairman, and CEO Chris Pappas, along with CFO Jim Leddy [2]

Summary of Chefs' Warehouse Conference Call Company Overview - **Company**: Chefs' Warehouse (NasdaqGS: CHEF) - **Industry**: Food distribution, specifically targeting upscale dining and food service sectors Key Points and Arguments Demand and Market Resilience - Chefs' Warehouse has observed an acceleration in customer spending, which is better than anticipated, indicating strong demand in the upscale dining market [5][6] - The company has a long history of resilience through economic downturns, including the financial crash, 9/11, and COVID-19, suggesting a consistent demand for upscale dining experiences [5][6] - The business model is designed to flex with demand, utilizing a commission-based sales team that adjusts based on sales performance [7] Customer Base and Market Segmentation - The customer base primarily consists of independent restaurants rather than chains, which are perceived to be more resilient in the current market [10][12] - Chefs' Warehouse serves a diverse range of clients, including upscale bakeries, cruise ships, airlines, and fine dining establishments, indicating a broad market reach [11] Market Share and Growth Strategy - The company has been successful in gaining market share due to its extensive experience and focus on the fragmented food distribution industry [13][14] - Chefs' Warehouse has been less acquisitive recently but plans to continue seeking smaller specialty companies for acquisition to enhance market presence [14] - The company is focused on organic growth through investments in facilities and technology, which are expected to drive efficiency and service improvements [15][22] Financial Performance and Margins - The company emphasizes gross profit dollars per unit rather than just gross margins, indicating a focus on overall profitability [27] - Chefs' Warehouse aims to expand EBITDA margins through operational efficiencies and leveraging investments made in infrastructure [29][32] - The company has experienced a drag on EBITDA margins due to significant investments in new markets but expects improvements as these investments mature [32][33] Technology and Innovation - Chefs' Warehouse is utilizing AI for procurement and pricing optimization, enhancing customer engagement through predictive analytics [40][41] - The company is exploring automation in its facilities but emphasizes the importance of human labor for certain tasks, indicating a balanced approach to technology integration [42] Capital Allocation and M&A Strategy - The capital allocation model is flexible, allowing for opportunistic share buybacks and debt management while maintaining a focus on organic growth [51] - The company is selective in its M&A strategy, focusing on fold-in acquisitions that complement existing operations and enhance capacity [49][50] Future Outlook - The company anticipates stable demand and continued growth in margins over the next 12 months, driven by operational leverage from past investments [52][54] - Chefs' Warehouse is optimistic about its growth trajectory, with expectations to exceed its 2028 goals through ongoing investments and market expansion [21][54] Additional Important Insights - The company has made significant investments in training and retaining its salesforce, which is crucial for maintaining competitive advantage in the market [16][18] - Chefs' Warehouse has adapted to inflationary pressures by offering diverse product solutions to its customers, helping them manage costs effectively [34][36] This summary encapsulates the key insights from the Chefs' Warehouse conference call, highlighting the company's strategic focus, market dynamics, and future growth prospects.

Core Viewpoint - Chefs' Warehouse (CHEF) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, indicating a positive earnings outlook that could lead to increased stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in a company's earnings picture, which is a significant factor influencing stock price movements [2][4]. - Rising earnings estimates for Chefs' Warehouse suggest an improvement in the company's underlying business, likely resulting in higher stock prices as investors respond positively [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of "buy" and "sell" ratings, ensuring that only the top 5% of stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions [9][10]. Recent Earnings Estimate Revisions - For the fiscal year ending December 2025, Chefs' Warehouse is expected to earn $1.90 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 8.6% over the past three months [8].

Core Viewpoint - The Chefs' Warehouse, Inc. will participate in a fireside chat at the Morgan Stanley Global Consumer & Retail Conference on December 2, 2025, at 8:45 a.m. ET [1]. Company Overview - The Chefs' Warehouse, Inc. is a leading distributor of specialty food products in the United States, the Middle East, and Canada, catering to chefs operating independent restaurants, fine dining establishments, and various culinary businesses [3]. - The company distributes over 88,000 products to more than 50,000 customer locations across its operational regions [3]. Investor Information - Investors and interested parties can access a webcast of the fireside chat through the company's investor relations website [2]. Contact Information - Investor relations contact is Jim Leddy, CFO, reachable at (718) 684-8415 [4].

Core Insights - Chefs' Warehouse has chosen RELEX Solutions to enhance its forecasting and replenishment processes across 49 distribution centers [1] - The partnership aims to improve operational efficiency with a focus on fresh food categories [1] - Chefs' Warehouse manages over 88,000 SKUs across various business units, indicating a complex supply chain that requires advanced planning solutions [1]

Core Insights - The Chefs' Warehouse, Inc. (CHEF) is experiencing significant activity in the options market, particularly with the Dec 19, 2025 $30 Call option showing high implied volatility, indicating potential for a major price movement [1][3] Company Overview - The Chefs' Warehouse holds a Zacks Rank of 1 (Strong Buy) within the Food – Miscellaneous industry, which is currently positioned in the bottom 29% of the Zacks Industry Rank [3] - Over the past 60 days, there have been no increases in earnings estimates for the current quarter, with one analyst reducing their estimate, leading to a consensus estimate drop from 70 cents to 67 cents per share [3] Market Sentiment - The high implied volatility suggests that options traders are anticipating a significant price movement for The Chefs' Warehouse shares, which could be indicative of an upcoming event that may lead to a rally or sell-off [2][4] - Seasoned options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of the option's value if the stock does not move as much as expected by expiration [4]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 increased approximately 9.6% to $1.021 billion from $931.5 million in Q3 2024 [12] - Gross profit increased 10% to $247.2 million for Q3 2025 compared to $224.7 million for Q3 2024 [13] - GAAP net income was $19.1 million or $0.44 per diluted share for Q3 2025, compared to net income of $14.1 million or $0.34 per diluted share for Q3 2024 [15] - Adjusted EBITDA for Q3 2025 was $65.1 million compared to $54.5 million for the prior year [15] Business Line Data and Key Metrics Changes - Specialty sales were up 7.7% over the prior year, driven by unique placement growth of 5.3% and reported specialty case growth of 3.2% [8] - Excluding the impact of the Texas Produce Processing and Packaging Program, specialty case growth was 5.4% versus the prior year quarter [8] - Center-of-the-plate pounds growth was 9.6% higher than the prior year when excluding the Texas Commodity Poultry Program attrition [9] Market Data and Key Metrics Changes - Reported inflation was 7.4% in Q3 2025, with 4.4% inflation in the specialty category and 12.3% inflation in the center-of-the-plate category [12] - Unique customer growth was approximately 5.8% year-over-year when excluding the impacts of the Texas poultry attrition and Middle East conflict [9] Company Strategy and Development Direction - The company completed the acquisition of Italco Food Products, enhancing its presence in the Colorado market [10] - The focus remains on leveraging a unique go-to-market and supply chain model to grow in urban and resort markets [10] - The company is cautiously optimistic about the fourth quarter performance, with strong holiday bookings anticipated [74] Management's Comments on Operating Environment and Future Outlook - Management noted that business and demand trends improved sequentially through Q3, with continued momentum into October [6] - The company has not seen a material impact from the government shutdown and remains optimistic about market performance [26][27] - Management highlighted the importance of maintaining a diverse customer base to mitigate risks associated with economic downturns [41] Other Important Information - The company raised its full-year financial guidance, estimating net sales for 2025 to be in the range of $4.085 billion to $4.115 billion [17] - Total liquidity at the end of Q3 was $224.6 million, with net debt approximately $575.2 million [16] Q&A Session Summary Question: Can you expand on the case growth trends and backdrop? - Management noted that July and August were stronger than expected this year, with good results continuing into October [22] Question: What is the potential impact of the government shutdown? - Management indicated that they have not seen a significant impact from past government shutdowns and remain cautiously optimistic [26][27] Question: Can you discuss the updated guidance and any conservatism in it? - Management raised full-year revenue guidance and feels confident about the mid to higher end of the guidance based on October trends [31] Question: How is the acquisition of Italco expected to impact capacity in Colorado? - Management expressed excitement about the acquisition, noting it aligns well with their growth strategy in the Rockies [32] Question: Have you seen accelerating share gains recently? - Management reported that high growth markets are growing low double digits, with mature markets also performing well [38] Question: What are the trends in beef costs and inflation? - Management acknowledged elevated protein prices but noted effective management of the inflationary environment [44] Question: How is the digital penetration progressing? - Management reported over 60% adoption on the specialty side, with digital tools enhancing salesforce efficiency [67] Question: What is the outlook for business-related travel? - Management noted ongoing domestic tourism and strong performance despite complaints about travel [69] Question: What are the operational challenges in key markets? - Management indicated that while challenges exist, they are optimistic about growth opportunities in Texas and other markets [85]

Financial Data and Key Metrics Changes - Net sales for Q3 2025 increased approximately 9.6% to $1.021 billion from $931.5 million in Q3 2024 [11] - Gross profit increased 10% to $247.2 million for Q3 2025 compared to $224.7 million for Q3 2024 [12] - GAAP net income was $19.1 million or $0.44 per diluted share for Q3 2025, compared to net income of $14.1 million or $0.34 per diluted share for Q3 2024 [13] - Adjusted EBITDA for Q3 2025 was $65.1 million compared to $54.5 million for Q3 2024 [13] Business Line Data and Key Metrics Changes - Specialty sales were up 7.7% year-over-year, driven by unique placement growth of 5.3% and reported specialty case growth of 3.2% [6] - Center-of-the-plate pounds were approximately 1.1% lower than the prior year, but excluding the Texas Commodity Poultry Program attrition, growth was 9.6% higher than the prior year [8] Market Data and Key Metrics Changes - Unique customer growth was reported at 2.6% year-over-year, impacted by the Texas commodity poultry attrition and temporary conflict in the Middle East [7] - In the Middle East, the business continued to grow and exceed expectations despite temporary impacts [8] Company Strategy and Development Direction - The company completed the acquisition of Italco Food Products, aiming to leverage its supply chain model to grow in urban and resort markets [9] - The company is focused on maintaining a diverse customer base and is cautiously optimistic about future growth despite economic uncertainties [50] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for Q4 2025, noting strong holiday bookings and positive trends continuing into October [77] - The company has not seen a material impact from government shutdowns historically and remains optimistic about its customer base's resilience [27][28] Other Important Information - The company raised its full-year financial guidance for 2025, estimating net sales between $4.085 billion and $4.115 billion [15][16] - Total liquidity at the end of Q3 was $224.6 million, with net debt approximately $575.2 million [14] Q&A Session Summary Question: Can you expand on the growth trends observed in Q3? - Management noted that July and August were stronger than expected, with good results continuing into September and October [23] Question: What impact do you foresee from the government shutdown? - Management indicated that they have not seen a significant impact from past government shutdowns [27][28] Question: How does the acquisition of Italco fit into your growth strategy? - The acquisition is seen as a strategic move to enhance market presence in the Rockies and leverage existing capabilities [41][66] Question: How is the company managing inflation and beef costs? - Management acknowledged elevated protein prices but emphasized effective supply chain management to navigate inflation [54] Question: What is the outlook for digital penetration and its impact on customer engagement? - Digital tools are enhancing salesforce efficiency, with adoption rates over 60% [72][73]

Financial Performance - Sales increased by 9.6% in Q3 2025 compared to Q3 2024[5] - Adjusted EBITDA increased by 19.5% in Q3 2025 compared to Q3 2024[11] - Adjusted EBITDA for the last twelve months (LTM) Q3 2025 reached $246.1 million[22] - Adjusted Operating Expenses as a percentage of Gross Profit improved by 114 bps to 74.9% LTM Q3 2025 compared to 2024[10] - Adjusted net income available to common shareholders was $22.7 million, or $0.50 per diluted share, for Q3 2025[32] Operational Metrics - Gross Profit per Route increased by 4% LTM Q3 2025 compared to 2024 and 37.8% compared to 2019[8] - Adjusted EBITDA per employee increased by 9% LTM Q3 2025 compared to 2024 and 28% compared to 2019[10] - Unique Customers increased by 2.6% in Q3 2025 compared to Q3 2024[5] - Placements increased by 5.3% in Q3 2025 compared to Q3 2024[5] Capital Allocation - Net Debt Leverage decreased to 2.3x in Q3 2025 from 2.5x at YE 2024[13] - The company repurchased $5 million of its shares in Q3 2025, bringing the total repurchases since January 2024 to $32.4 million[17]