CHEF — The Chefs' Warehouse, Inc.

Summary of The Chefs' Warehouse Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Net Sales: Increased by 9.6% to $1.021 billion from $931.5 million in Q3 2024.
• Gross Profit: Rose by 10% to $247.2 million, with gross profit margins slightly up by 7 basis points to 24.2%.
• Operating Income: Increased to $38.9 million from $31.9 million in the prior year.
• GAAP Net Income: $19.1 million, or $0.44 per diluted share, compared to $14.1 million, or $0.34 per diluted share, in Q3 2024.
• Adjusted EBITDA: $65.1 million, up from $54.5 million year-over-year.
• Adjusted Net Income: $21.5 million, or $0.50 per diluted share, compared to $15.4 million, or $0.36 per diluted share, in the prior year.
• Liquidity: Total liquidity of $224.6 million, with net debt of approximately $575.2 million and a net debt to adjusted EBITDA ratio of 2.3x.

2. Strategic Updates and Business Highlights:

• Demand trends improved sequentially, with strong growth in revenue and gross profit across domestic and international markets.
• Specialty sales grew by 7.7%, driven by unique placement growth and price inflation.
• The company eliminated two non-core programs in Texas, which represented about 1% of revenue, to streamline operations.
• The acquisition of Italco Food Products was completed, enhancing the company's presence in the Colorado market.
• Continued investment in digital tools and sales force training is yielding positive results, with digital penetration exceeding 60%.

3. Forward Guidance and Outlook:

• The company raised its full-year guidance for 2025, estimating net sales between $4.085 billion and $4.115 billion, gross profit between $987 million and $995 million, and adjusted EBITDA between $247 million and $253 million.
• The outlook for Q4 appears positive, with strong holiday bookings anticipated based on recent customer feedback.

4. Bad News, Challenges, or Points of Concern:

• Unique customer growth was impacted by the attrition of low-margin customers in Texas and temporary disruptions due to heightened conflict in the Middle East.
• Center-of-the-plate pounds were down 1.1% year-over-year, but this was mitigated when excluding the Texas program attrition.
• There are concerns regarding potential impacts from a U.S. government shutdown, although management expressed optimism based on historical resilience during such events.

5. Notable Q&A Insights:

• Management noted that July and August were stronger than expected, contrasting with previous years, and trends continued positively into October.
• The company is cautiously optimistic about the fourth quarter, with expectations for continued growth in the Middle East despite some regional challenges.
• Questions about the impact of industry consolidation were addressed, with management suggesting that such events could provide opportunities for Chefs' Warehouse to gain market share.
• The company is focused on organic growth initiatives, particularly in Texas and Florida, where they see significant long-term potential.

Overall, The Chefs' Warehouse demonstrated solid financial performance in Q3 2025, with strategic initiatives aimed at enhancing growth and market share, while also navigating challenges related to customer attrition and geopolitical factors.