The Chefs' Warehouse, Inc. Q3 FY2025 earnings call

• Business and demand trends improved sequentially through the third quarter with momentum continuing into October. Operating divisions across domestic and international markets had strong revenue and gross profit growth, and increased unique item placements.
• In 2025, 2 noncore programs in Texas (representing ~1% of revenue) were eliminated. Until lapped in 2026, price and volume metrics are presented as reported and excluding these changes.
• Highlights from the third quarter include 9.6% growth in net sales, and slides 3 and 4 showed improvements in gross profit dollars per route, adjusted EBITDA per employee, and adjusted operating expenses as a percentage of gross profit.
• Subsequent to fiscal third quarter close, acquired Italco Food Products, a specialty food and ingredient distributor in Denver.

In the third quarter, specialty sales were up 7.7% over prior year, driven by unique placement growth of 5.3%, reported specialty case growth of 3.2%, and price inflation. Excluding the elimination of the Texas produce processing and packaging program, specialty case growth was 5.4%. Unique customer growth was 2.6% year-over-year, but excluding impacts from Texas commodity poultry attrition and Middle East conflict, it was ~5.8%. Pounds in center-of-the-plate were ~1.1% lower than prior year, but excluding the Texas commodity poultry program attrition, center-of-the-plate pounds growth was 9.6% higher. Gross profit margins increased approximately 7 basis points, with specialty category gross margins up ~59 basis points and center-of-the-plate category down ~49 basis points.

• Full year 2025 net sales estimated to be in the range of $4.085 billion to $4.115 billion.
• Full year 2025 gross profit expected to be between $987 million and $995 million.
• Full year 2025 adjusted EBITDA expected to be between $247 million and $253 million.
• Convertible notes maturing in 2028 are expected to be dilutive, resulting in fully diluted share count of approximately 46 million shares.

• Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially.
• Potential impacts from government shutdown and Middle East conflict.
• Industry consolidation and its potential effects on the company.

Q: Thoughts on the potential impact of the government shutdown?

A: Cautiously optimistic, with no real big impact seen to date.

Q: Any thoughts on market share trends?

A: High-growth markets growing low double digits to 10%-20%, mature markets growing healthily, taking market share by adding categories in underpenetrated areas.

Q: Thoughts on the acquisition of Italco?

A: Italco is a super-high-quality company with a similar catalog of high-end products, servicing many customers, and will be a great fit as Chefs' Warehouse integrates and expands in Colorado and surrounding areas.

Q: Progress with digital penetration?

A: Digital team has done a great job, making the sales force more efficient, with digital penetration over 60% on the specialty side, and continuing to invest for better ROI.