The Chefs' Warehouse(CHEF) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (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 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 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 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][91] Notes to Condensed Consolidated Financial Statements 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] - 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] - 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][82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] Liquidity and Capital Resources 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] - Projected capital expenditures for fiscal 2025 are estimated to be between $40.0 million and $50.0 million[88] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] - A 100 basis point increase in market interest rates would decrease after-tax earnings by approximately $2.5 million per year[93] Item 4. Controls and Procedures 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] - No material changes in internal control over financial reporting occurred during the quarter ended June 27, 2025[95] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 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] Item 5. Other Information 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] Item 6. Exhibits 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]