RIDGEFIELD, Conn., July 28, 2021 (GLOBE NEWSWIRE) -- The Chefs’ Warehouse, Inc. (NASDAQ: CHEF) (the “Company” or “Chefs’”), a premier distributor of specialty food products in the United States and Canada, today reported financial results for its second quarter ended June 25, 2021.
Financial highlights for the second quarter of 2021:
“Business activity and revenue grew steadily throughout the second quarter as existing and new customer openings increased and COVID-related restrictions eased across many key markets.” said Chris Pappas, Chairman and Chief Executive Officer of the Company. “As the quarter progressed, our customers benefited from in-door and out-door capacity growth, strengthening consumer demand and the initial stages of menu expansion. Sales toward the end of June 2021 were trending in line with 2019 sales, inclusive of acquisitions completed in 2020 and 2021.”
Second Quarter Fiscal 2021 Results
Net sales for the quarter ended June 25, 2021 increased 111.0% to $423.0 million from $200.5 million for the quarter ended June 26, 2020. Organic sales increased $212.6 million, or 106.1% versus the prior year quarter. Sales growth of $9.9 million, or 4.9%, resulted from acquisitions. Organic case count increased approximately 122.9% in the Company’s specialty category with unique customers and placements increases at 94.6% and 127.5%, respectively, compared to the prior year quarter. Organic pounds sold in the Company’s center-of-the-plate category increased approximately 66.5% compared to the prior year quarter. Estimated inflation was 10.6% in the Company’s specialty categories and estimated inflation was 12.1% in the center-of-the-plate categories compared to the prior year quarter.
Gross profit increased approximately 120.8% to $95.9 million for the second quarter of 2021 from $43.4 million for the second quarter of 2020. Gross profit margin increased approximately 101 basis points to 22.7% from 21.7%. Gross margins in the Company’s specialty category increased 629 basis points and gross margins decreased 421 basis points in the Company’s center-of-the-plate category compared to the prior year quarter. Prior period results include a charge of approximately $5.5 million related to estimated inventory losses from obsolescence at the onset of the COVID-19 pandemic.
Selling, general and administrative expenses increased by approximately 32.6% to $90.4 million for the second quarter of 2021 from $68.2 million for the second quarter of 2020. These increases were primarily volume-based increases to support our sales growth for the quarter ended June 25, 2021. As a percentage of net sales, operating expenses were 21.4% in the second quarter of 2021 compared to 34.0% in the second quarter of 2020.
Other operating expense increased by approximately $0.2 million primarily due to a $0.6 million impairment of Cambridge trademarks as a result of a shift in brand strategy to leverage our Allen Brothers brand in our New England region in the second quarter of fiscal 2021, partially offset by non-cash credits of $0.1 million for changes in the fair value of our contingent earn-out liabilities compared to non-cash charges of $0.2 million in the prior year period.
Operating income for the second quarter of 2021 was $4.7 million compared to operating loss of $25.4 million for the second quarter of 2020. The increase in operating income was driven primarily by higher gross profit, partially offset by higher selling, general and administrative, as discussed above. As a percentage of net sales, operating income was 1.1% in the second quarter of 2021 as compared to operating loss of 12.6% in the second quarter of 2020.
Total interest expense decreased to $4.4 million for the second quarter of 2021 compared to $5.8 million for the second quarter of 2020. The decrease in interest expense is the result of $1.2 million one-time third-party costs incurred during the second quarter of 2020 in connection with the extension of a majority of our senior secured term loans.
Net income for the second quarter of 2021 was $1.1 million, or $0.03 per diluted share, compared to net loss of $20.3 million, or $(0.62) per diluted share, for the second quarter of 2020.
Adjusted EBITDA1 was $17.2 million for the second quarter of 2021 compared to negative adjusted EBITDA of $(13.7) million for the second quarter of 2020. For the second quarter of 2021, adjusted net income1 was $1.5 million, or $0.04 per diluted share compared to adjusted net loss of $18.7 million, or $(0.57) per diluted share for the second quarter of 2020.
Full Year 2021 Guidance
Due to the continued uncertainty regarding the pace of broader economic recovery and the timing of event and travel related business activity, the Company will not be providing guidance for 2021 at this time. The Company will look to provide guidance as it gains more clarity as to the pace of recovery, outlook and the broader post-pandemic related environment.
Second Quarter 2021 Earnings Conference Call
The Company will host a conference call to discuss second quarter 2021 financial results today at 8:30 a.m. EST. Hosting the call will be Chris Pappas, chairman and chief executive officer, and Jim Leddy, chief financial officer. The conference call will be webcast live from the Company’s investor relations website at http://investors.chefswarehouse.com/. An online archive of the webcast will be available on the Company’s investor relations website.
Forward-Looking Statements
Statements in this press release regarding the Company’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties and are based on current expectations and management estimates; actual results may differ materially. The risks and uncertainties which could impact these statements include, but are not limited to the following: our sensitivity to general economic conditions, including disposable income levels and changes in consumer discretionary spending; our ability to expand our operations in our existing markets and to penetrate new markets through acquisitions; we may not achieve the benefits expected from our acquisitions, which could adversely impact our business and operating results; we may have difficulty managing and facilitating our future growth; conditions beyond our control could materially affect the cost and/or availability of our specialty food products or center-of-the-plate products and/or interrupt our distribution network; our increased distribution of center-of-the-plate products, like meat, poultry and seafood, involves increased exposure to price volatility experienced by those products; our business is a low-margin business and our profit margins may be sensitive to inflationary and deflationary pressures; because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments, including adverse weather conditions, in these areas; fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations; our ability to raise capital in the future may be limited; we may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all; interest charged on our outstanding debt may be adversely affected by changes in the method of determining London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with an alternative rate; our business operations and future development could be significantly disrupted if we lose key members of our management team; and significant public health epidemics or pandemics, including COVID-19, may adversely affect our business, results of operations and financial condition. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. A more detailed description of these and other risk factors is contained in the Company’s most recent annual report on Form 10-K filed with the SEC on February 23, 2021 and other reports filed by the Company with the SEC since that date. The Company is not undertaking to update any information until required by applicable laws. Any projections of future results of operations are based on a number of assumptions, many of which are outside the Company’s control and should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. The Company may from time to time update these publicly announced projections, but it is not obligated to do so.
About The Chefs’ Warehouse
The Chefs’ Warehouse, Inc. (http://www.chefswarehouse.com) is a premier distributor of specialty food products in the United States and Canada focused on serving the specific needs of chefs who own and/or operate some of the nation’s leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolateries, cruise lines, casinos and specialty food stores. The Chefs’ Warehouse, Inc. carries and distributes more than 50,000 products to more than 34,000 customer locations throughout the United States and Canada.
Contact:Investor Relations Jim Leddy, CFO, (718) 684-8415
________________________1EBITDA, Adjusted EBITDA, adjusted net income (loss) and adjusted EPS are non-GAAP measures. Please see the schedules accompanying this earnings release for a reconciliation of EBITDA, Adjusted EBITDA, adjusted net income (loss) and adjusted EPS to these measures’ most directly comparable GAAP measure.
THE CHEFS’ WAREHOUSE, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(unaudited, in thousands except share amounts and per share data) | |||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||
June 25, 2021 | June 26, 2020 | June 25, 2021 | June 26, 2020 | ||||||||||||
Net sales | $ | 422,968 | $ | 200,496 | $ | 703,185 | $ | 575,927 | |||||||
Cost of sales | 327,094 | 157,070 | 548,364 | 447,013 | |||||||||||
Gross profit | 95,874 | 43,426 | 154,821 | 128,914 | |||||||||||
Selling, general and administrative expenses | 90,358 | 68,165 | 170,603 | 177,047 | |||||||||||
Other operating (income) expenses, net | 857 | 670 | (313 | ) | (5,666 | ) | |||||||||
Operating income (loss) | 4,659 | (25,409 | ) | (15,469 | ) | (42,467 | ) | ||||||||
Interest expense | 4,408 | 5,772 | 9,171 | 10,896 | |||||||||||
Income (loss) before income taxes | 251 | (31,181 | ) | (24,640 | ) | (53,363 | ) | ||||||||
Provision for income tax benefit | (847 | ) | (10,847 | ) | (7,817 | ) | (18,944 | ) | |||||||
Net income (loss) | $ | 1,098 | $ | (20,334 | ) | $ | (16,823 | ) | $ | (34,419 | ) | ||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.03 | $ | (0.62 | ) | $ | (0.46 | ) | $ | (1.10 | ) | ||||
Diluted | $ | 0.03 | $ | (0.62 | ) | $ | (0.46 | ) | $ | (1.10 | ) | ||||
Weighted average common sharesoutstanding: | |||||||||||||||
Basic | 36,831,054 | 32,698,295 | 36,615,463 | 31,150,883 | |||||||||||
Diluted | 37,081,186 | 32,698,295 | 36,615,463 | 31,150,883 |
THE CHEFS’ WAREHOUSE, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
AS OF JUNE 25, 2021 AND DECEMBER 25, 2020 | |||||||
(in thousands) | |||||||
June 25, 2021 | December 25, 2020 | ||||||
(unaudited) | |||||||
Cash and cash equivalents | $ | 146,920 | $ | 193,281 | |||
Accounts receivable, net | 136,072 | 96,383 | |||||
Inventories, net | 122,936 | 82,519 | |||||
Prepaid expenses and other current assets | 33,654 | 33,479 | |||||
Total current assets | 439,582 | 405,662 | |||||
Equipment, leasehold improvements and software, net | 114,982 | 115,448 | |||||
Operating lease right-of-use assets | 107,736 | 115,224 | |||||
Goodwill | 220,575 | 214,864 | |||||
Intangible assets, net | 108,799 | 111,717 | |||||
Deferred taxes, net | 15,290 | 7,535 | |||||
Other assets | 3,634 | 3,875 | |||||
Total assets | $ | 1,010,598 | $ | 974,325 | |||
Accounts payable | $ | 107,918 | $ | 57,515 | |||
Accrued liabilities | 29,949 | 27,924 | |||||
Short-term operating lease liabilities | 17,121 | 17,167 | |||||
Accrued compensation | 15,051 | 9,401 | |||||
Current portion of long-term debt | 5,844 | 6,095 | |||||
Total current liabilities | 175,883 | 118,102 | |||||
Long-term debt, net of current portion | 395,543 | 398,084 | |||||
Operating lease liabilities | 101,906 | 109,133 | |||||
Other liabilities | 4,217 | 4,416 | |||||
Total liabilities | 677,549 | 629,735 | |||||
Preferred stock | — | — | |||||
Common stock | 380 | 373 | |||||
Additional paid in capital | 308,852 | 303,734 | |||||
Cumulative foreign currency translation adjustment | (1,894 | ) | (2,051 | ) | |||
Retained earnings | 25,711 | 42,534 | |||||
Stockholders’ equity | 333,049 | 344,590 | |||||
Total liabilities and stockholders’ equity | $ | 1,010,598 | $ | 974,325 |
THE CHEFS’ WAREHOUSE, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
FOR THE TWENTY-SIX WEEKS ENDED JUNE 25, 2021 AND JUNE 26, 2020 | |||||||
(unaudited, in thousands) | |||||||
June 25, 2021 | June 26, 2020 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (16,823 | ) | $ | (34,419 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Depreciation and amortization | 10,660 | 9,675 | |||||
Amortization of intangible assets | 6,643 | 6,720 | |||||
Provision for allowance for doubtful accounts | 488 | 19,611 | |||||
Non-cash operating lease expense | 209 | 463 | |||||
(Benefit) provision for deferred income taxes | (7,755 | ) | (5,814 | ) | |||
Amortization of deferred financing fees | 1,364 | 1,478 | |||||
Stock compensation | 5,738 | 2,850 | |||||
Change in fair value of contingent earn-out liabilities | (1,420 | ) | (6,649 | ) | |||
Intangible asset impairment | 597 | — | |||||
Loss on asset disposal | 224 | 43 | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (37,107 | ) | 70,483 | ||||
Inventories | (39,347 | ) | 34,877 | ||||
Prepaid expenses and other current assets | (101 | ) | (9,460 | ) | |||
Accounts payable, accrued liabilities and accrued compensation | 52,541 | (43,398 | ) | ||||
Other liabilities | |||||||
Other assets and liabilities | 167 | 1,119 | |||||
Net cash provided (used in) by operating activities | (23,922 | ) | 47,579 | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (9,574 | ) | (4,400 | ) | |||
Cash paid for acquisitions, net of cash received | (7,165 | ) | (63,450 | ) | |||
Net cash used in investing activities | (16,739 | ) | (67,850 | ) | |||
Cash flows from financing activities: | |||||||
Payment of debt, finance lease and other financing obligations | (34,372 | ) | (37,439 | ) | |||
Proceeds from the issuance of common stock, net of issuance costs | — | 85,941 | |||||
Proceeds from debt issuance | 51,750 | — | |||||
Payment of deferred financing fees | (1,450 | ) | (856 | ) | |||
Surrender of shares to pay withholding taxes | (1,487 | ) | (2,727 | ) | |||
Cash paid for contingent earn-out liabilities | (83 | ) | (2,927 | ) | |||
Borrowings under asset based loan facility | — | 100,000 | |||||
Payments under asset based loan facility | (20,000 | ) | (60,000 | ) | |||
Net cash (used in) provided by financing activities | (5,642 | ) | 81,992 | ||||
Effect of foreign currency translation on cash and cash equivalents | (58 | ) | (130 | ) | |||
Net (decrease) increase in cash and cash equivalents | (46,361 | ) | 61,591 | ||||
Cash and cash equivalents at beginning of period | 193,281 | 140,233 | |||||
Cash and cash equivalents at end of period | $ | 146,920 | $ | 201,824 |
THE CHEFS’ WAREHOUSE, INC. | |||||||||||||||
RECONCILIATION OF GAAP NET INCOME (LOSS) PER COMMON SHARE | |||||||||||||||
(unaudited; in thousands except share amounts and per share data) | |||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||
June 25, 2021 | June 26, 2020 | June 25, 2021 | June 26, 2020 | ||||||||||||
Numerator: | |||||||||||||||
Net income (loss) | $ | 1,098 | $ | (20,334 | ) | $ | (16,823 | ) | $ | (34,419 | ) | ||||
Denominator: | |||||||||||||||
Weighted average basic common sharesoutstanding | 36,831,054 | 32,698,295 | 36,615,463 | 31,150,883 | |||||||||||
Dilutive effect of unvested common shares | 250,132 | — | — | — | |||||||||||
Weighted average diluted common sharesoutstanding | 37,081,186 | 32,698,295 | 36,615,463 | 31,150,883 | |||||||||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.03 | $ | (0.62 | ) | $ | (0.46 | ) | $ | (1.10 | ) | ||||
Diluted | $ | 0.03 | $ | (0.62 | ) | $ | (0.46 | ) | $ | (1.10 | ) |
THE CHEFS’ WAREHOUSE, INC. | |||||||||||||||
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA TO NET INCOME (LOSS) | |||||||||||||||
(unaudited; in thousands) | |||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||
June 25, 2021 | June 26, 2020 | June 25, 2021 | June 26, 2020 | ||||||||||||
Net income (loss) | $ | 1,098 | $ | (20,334 | ) | $ | (16,823 | ) | $ | (34,419 | ) | ||||
Interest expense | 4,408 | 5,772 | 9,171 | 10,896 | |||||||||||
Depreciation | 5,553 | 4,913 | 10,660 | 9,675 | |||||||||||
Amortization | 3,104 | 3,422 | 6,643 | 6,720 | |||||||||||
Provision for income tax benefit | (847 | ) | (10,847 | ) | (7,817 | ) | (18,944 | ) | |||||||
EBITDA (1) | 13,316 | (17,074 | ) | 1,834 | (26,072 | ) | |||||||||
Adjustments: | |||||||||||||||
Stock compensation (2) | 3,280 | 1,999 | 5,738 | 2,850 | |||||||||||
Other operating income (3) | 857 | 670 | (313 | ) | (5,666 | ) | |||||||||
Duplicate rent (4) | 694 | 698 | 1,389 | 1,396 | |||||||||||
Payroll tax credit (5) | (1,418 | ) | — | (1,418 | ) | — | |||||||||
Moving expenses (6) | 438 | — | 438 | — | |||||||||||
Adjusted EBITDA (1) | $ | 17,167 | $ | (13,707 | ) | $ | 7,668 | $ | (27,492 | ) |
THE CHEFS’ WAREHOUSE, INC. | |||||||||||||||
RECONCILIATION OF ADJUSTED NET INCOME (LOSS) TO NET INCOME (LOSS) | |||||||||||||||
(unaudited; in thousands except share amounts and per share data) | |||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||
June 25, 2021 | June 26, 2020 | June 25, 2021 | June 26, 2020 | ||||||||||||
Net income (loss) | $ | 1,098 | $ | (20,334 | ) | $ | (16,823 | ) | $ | (34,419 | ) | ||||
Adjustments to Reconcile Net Income (Loss)to Adjusted Net Income (Loss) (1): | |||||||||||||||
Other operating expenses (2) | 857 | 670 | (313 | ) | (5,666 | ) | |||||||||
Duplicate rent (3) | 694 | 698 | 1,389 | 1,396 | |||||||||||
Moving expenses (4) | 438 | — | 438 | — | |||||||||||
Third party debt modification fees (5) | — | 1,233 | — | 1,233 | |||||||||||
Payroll tax credit (6) | (1,418 | ) | — | (1,418 | ) | — | |||||||||
Tax effect of adjustments (7) | (160 | ) | (980 | ) | (27 | ) | 1,078 | ||||||||
Total adjustments | 411 | 1,621 | 69 | (1,959 | ) | ||||||||||
Adjusted net income (loss) | $ | 1,509 | $ | (18,713 | ) | $ | (16,754 | ) | $ | (36,378 | ) | ||||
Diluted adjusted income (loss) per common share | $ | 0.04 | $ | (0.57 | ) | $ | (0.46 | ) | $ | (1.17 | ) | ||||
Diluted shares outstanding - adjusted | 37,081,186 | 32,698,295 | 36,615,463 | 31,150,883 |
THE CHEFS’ WAREHOUSE, INC. | |||||||||||||||
RECONCILIATION OF ADJUSTED EARNINGS PER COMMON SHARE | |||||||||||||||
(unaudited; in thousands except share amounts and per share data) | |||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||
June 25, 2021 | June 26, 2020 | June 25, 2021 | June 26, 2020 | ||||||||||||
Numerator: | |||||||||||||||
Adjusted net income (loss) | $ | 1,509 | $ | (18,713 | ) | $ | (16,754 | ) | $ | (36,378 | ) | ||||
Denominator: | |||||||||||||||
Weighted average basic common shares outstanding | 36,831,054 | 32,698,295 | 36,615,463 | 31,150,883 | |||||||||||
Dilutive effect of unvested common shares | 250,132 | — | — | — | |||||||||||
Weighted average diluted common shares outstanding | 37,081,186 | 32,698,295 | 36,615,463 | 31,150,883 | |||||||||||
Adjusted earnings per share: | |||||||||||||||
Diluted | $ | 0.04 | $ | (0.57 | ) | $ | (0.46 | ) | $ | (1.17 | ) |
Source: The Chefs' Warehouse, Inc.