The Chefs' Warehouse(US:CHEF)2026-02-11 14:30Financial Data and Key Metrics Changes - Net sales for Q4 2025 increased approximately 10.5% to $1.143 billion from $1.034 billion in Q4 2024, driven by a 9.7% increase in organic sales and a 0.8% contribution from acquisitions [11][12] - Gross profit increased 10.2% to $276.6 million, while gross profit margins decreased approximately 8 basis points to 24.2% [13] - Adjusted EBITDA for Q4 2025 was $80.3 million, compared to $68.2 million for the prior year [16] - GAAP net income was $21.7 million, or $0.50 per diluted share, compared to $23.9 million, or $0.55 per diluted share for Q4 2024 [16] Business Line Data and Key Metrics Changes - Organic specialty sales grew 6.4% year-over-year, driven by unique placement growth of 4.2% and reported specialty case growth of 3.3% [5][6] - Excluding the Texas Produce Processing and Packaging Program, specialty case growth was 5.4% compared to the prior year quarter [6] - Pounds in Center of the Plate were approximately 2.4% lower than the prior year, but excluding the Texas program attrition, growth was 7.5% higher [7] Market Data and Key Metrics Changes - Net inflation was 8.3% in Q4 2025, with 3.4% inflation in the specialty category and 16.1% in the center of plate category [12] - The company experienced strong growth in various markets, particularly in upscale casual and higher-end dining segments [4] Company Strategy and Development Direction - The company aims to continue growing market share and expanding its customer base while focusing on operational efficiency and investment in technology [4][10] - There is a commitment to maintaining a diversified portfolio of suppliers and customers to mitigate risks associated with tariffs and commodity volatility [27][49] - The company plans to keep dry powder for potential acquisitions while also returning cash to shareholders opportunistically [28][32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the business environment, noting strong customer performance and growth in hotel bookings [26][27] - The company anticipates a revenue growth of 6%-8% for 2026, with inflation expected to normalize between 2%-4% [35] - Management highlighted the importance of leveraging technology and improving operational efficiencies to enhance profitability [72] Other Important Information - The company achieved 9.1% full-year organic revenue growth, exceeding $4 billion in revenue for the first time [9] - Adjusted EBITDA margin for the year was 6.2%, with a 29% growth in adjusted EPS compared to 2024 [9] Q&A Session Summary Question: How have year-to-date sales tracked versus expectations given the winter weather? - Management noted that January was strong despite being seasonally weak, and the storm only temporarily impacted the first week of February, with a strong recovery in the second week [20] Question: Can you discuss the drivers of operating expense leverage? - Management indicated that gross profit margins are expected to remain flat, focusing on growing gross profit dollars higher than adjusted operating expenses [21] Question: What challenges or uncertainties does management foresee for 2026? - Management mentioned inflation, tariff noise, and the need to maintain a diversified customer base as potential challenges [26] Question: What are the capital allocation priorities for 2026? - Management aims to keep dry powder for acquisitions while also strengthening the balance sheet and returning cash to shareholders [28] Question: Are there notable regional performance variances? - Management reported strong performance across key markets, including California, Texas, and Florida, with ongoing investments in facilities and sales teams [37] Question: How is AI being utilized in the business? - Management stated that AI is integrated into daily operations, improving customer insights and operational efficiencies [45] Question: What is the outlook for M&A activity? - Management remains cautious but optimistic about potential M&A opportunities that align with strategic goals [48]