The Chefs' Warehouse(US:CHEF)2026-02-11 14:32Financial 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 [12][15] - Gross profit increased 10.2% to $276.6 million, with gross profit margins decreasing approximately 8 basis points to 24.2% [15] - Adjusted EBITDA for Q4 2025 was $80.3 million, compared to $68.2 million for the prior year [17] - Adjusted EPS grew 29% versus 2024, reaching $0.68 per diluted share [10][17] Business Line Data and Key Metrics Changes - Organic specialty sales were up 6.4% year-over-year, driven by unique placement growth of 4.2% and reported specialty case growth of 3.3% [7] - Excluding the Texas Produce Processing and Packaging Program, specialty case growth was 5.4% compared to the prior year quarter [8] - Pounds in Center-of-the-Plate were approximately 2.4% lower than the prior year, but excluding the Texas Commodity Poultry Program attrition, growth was 7.5% higher [8] Market Data and Key Metrics Changes - Net inflation was 8.3% in Q4, with 3.4% inflation in the specialty category and 16.1% in the center-of-plate category [13] - Excluding the impact of the Commodity Poultry Program attrition, net inflation in center-of-the-plate was 9.5% [13] Company Strategy and Development Direction - The company aims to continue growing market share and expanding its customer base, focusing on upscale casual to higher-end dining [5][6] - Investments in distribution center capacity expansion and facility consolidation are ongoing, with a focus on operational efficiency and talent development [10][11] - The company is cautiously optimistic about overcoming challenges such as inflation and tariffs, leveraging a diversified portfolio of suppliers [29][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance of customers and the overall market, despite challenges posed by weather and inflation [21][29] - The company anticipates revenue growth of 6%-8% for 2026, with a focus on maintaining operating leverage and managing inflation [37][39] Other Important Information - The company achieved over $4 billion in revenue for the first time in its history, with a full-year organic revenue growth of 9.1% [10] - Total liquidity at the end of Q4 was $280.5 million, with net debt to adjusted EBITDA at approximately 2.1x [18] Q&A Session Summary Question: How have year-to-date sales tracked versus expectations given the winter weather? - Management noted that January was strong, and while the storm impacted the first week of February, sales bounced back in the following week [21] 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 [23] Question: What challenges or uncertainties does management foresee for 2026? - Management highlighted inflation, tariffs, and market volatility as potential challenges but expressed confidence in the company's diversified portfolio [29] Question: What are the capital allocation priorities for 2026? - Management aims to keep dry powder for acquisitions while also considering share buybacks and strengthening the balance sheet [31] Question: Any notable regional performance variances? - Management reported strong performance across key markets like California, Texas, and Florida, with ongoing investments in facilities and sales teams [41] Question: How is the company leveraging AI for customer insights? - Management stated that AI is integrated into daily operations, enhancing customer behavior analysis and operational efficiency [48] Question: What is the outlook for M&A activity? - Management remains cautious but optimistic about finding strategic M&A opportunities that align with the company's growth strategy [50][52]