The Chefs' Warehouse, Inc.

Greetings and welcome to the Chefs' Warehouse first quarter 2019 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldous, General Counsel and Corporate Secretary for the Chefs' Warehouse. Please go ahead.

Thank you, Operator. Good afternoon, everyone. With me on today's call are Chris Pappas, Founder, Chairman, and CEO, and Jim Leddy, our CFO. By now, you should have access to our first quarter 2019 earnings press release. It can also be found at www.chefswarehouse.com under the Investor Relations section. Throughout this conference call, we will be presenting non-GAAP financial measures, including, among others, historical and estimated EBITDA and adjusted EBITDA, as well as both historical and estimated adjusted net income and adjusted earnings per share. These measurements are not calculated in accordance with GAAP. and may be calculated differently in similarly titled non-GAAP financial measures used by other companies. Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements, including statements regarding our estimated financial performance. Such forward-looking statements are not guarantees of future performance. and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's release. Others are discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q, which are available on the SEC website. Today we are going to provide a business update, go over our first quarter results in detail and review our 2019 full year guidance. Then we will open up the call for questions. With that, I will turn the call over to Chris Pappas. Chris?

Thank you, Alex, and thank you all for joining our first quarter 2019 earnings call. Building on our 2018 performance, we started 2019 with continued strength in customer demand and good execution by our teams in the first quarter. During the quarter, we delivered solid organic growth expanded our customer base and executed on a key acquisition in the center of the plate category with the acquisition of Bassian Farms. We generated strong year-over-year top line and gross profit growth despite challenging weather in our West Coast and Midwest regions. I'd like to thank our entire team for delivering the Chefs' Warehouse premier product and experience to our customers as we continue to make progress on technology and market Expansion Initiatives. A few highlights from the first quarter include 5.6% organic growth in net sales. Specialty sales were up 6.6% organically over the prior year, which was driven by unique customer growth of approximately 6.2%, placement growth of 5.2%, and specialty case growth of 5.2%. Organic Pounds growth in center of the plate was 3.1%. Gross profit margins increased approximately 30 basis points. Gross margin in the specialty category declined 39 basis points as compared to the first quarter of 2018, while gross margins in the center of the plate category increased 106 basis points year over year. In addition, Gross profit dollars grew approximately 13.4% versus prior year first quarter. In a moment, Jim will provide more details on margin in a few moments. As we announced in February, we are excited to add Bassian Farms to our growing Northern California market and the Chefs' Warehouse family of companies. Bassian will focus on delivering high-quality, natural, sustainable, local, and antibiotic-free center-of-the-plate products to our growing customer base in the Bay Area and beyond. We have already begun combining production operations, and over time, we'll realize further operational and distribution synergies throughout integration. We welcome Lee, Dan, and the entire Bassian team to Chefs' Warehouse, and we look forward to growing our Northern California market together. We continue to progress on multiple systems and operational process improvements during the first quarter. We initiated the process of converting our Texas operations to our ERP platform. This coincides with our move into our new Dallas facility. We expect to complete this conversion this summer. Our Philadelphia ERP conversion is scheduled to begin later in 2019 with our West Coast sites coming on in early 2020. Customer adoption of our e-commerce platform continues to grow. As of April, we estimate sales on e-commerce and mobile platform represented more than 11% of total organic revenue and 15% of all specialty orders placed online. Additionally, more customers are using the mobile platform to communicate orders as approximately 18% of online revenue came via mobile. During the quarter, we continued our rollout of truck scanning across our distribution centers. Our Chicago distribution center went live in the first quarter, and New York went live in April. While early in the process, initial results have shown year-over-year reduction in errors and credits on a per-cases basis. Our Northwest Ohio and Florida markets will follow with implementations during the remainder of 2019. In addition, smart drive camera technology has been installed in our New York fleet during the first quarter, with several other markets underway in the second quarter. We continue to make progress on several facility expansion projects. As of mid-April 2019, we've begun operations out of our new distribution center in Dallas, Texas. The 85,000 square foot A freezer, cooler, and dry space provides us with considerable capacity to grow this important new market. Additionally, during the first quarter, we signed the lease for a new facility in Los Angeles and expect to begin design and build out in the second half of 2019. In the near term, we are focused on finalizing site selection for a new facility to support our growth in Florida. Once again, I would like to thank all of our teams for delivering a strong first quarter and helping to build the Chefs' Warehouse platform we have today. Their continued dedication to serving our customers allows us to focus on continuous improvement in the near term and at the same time make the investments required to deliver the long-term growth. With that, I'll turn it over to Jim to discuss more detailed financial information. Jim? Thank you, Chris, and good afternoon, everyone.