The Chefs' Warehouse(US:CHEF)2025-10-29 13:32Financial 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]