The Chefs' Warehouse, Inc.

Ladies and gentlemen, greetings and welcome to the Chefs' Warehouse first quarter 2020 earnings conference call. As a reminder, this conference is being recorded. I'd now like to turn our conference over to your host, Alex Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, sir.

Good afternoon, everyone. With me on today's call are Chris Pappas, founder, chairman, and CEO, and Tim Leddy, our CFO. By now, you should have access to our first quarter 2020 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 from similarly titled non-GAAP financial measures used by other companies. Quantitated 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 have actual results that 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 10-8, and quarterly reports on Form 10-Q, which are available on the FTC website. Today, we are going to provide a business update and go over our first quarter results in detail. 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 2020 earnings call. First, let me begin by saying that All of us at the Chefs' Warehouse hope that everyone on this call and the entire investor community remains safe and healthy during this time. As a company, our primary focus is the health and safety of our team members, customers, and supplier partners. Our thoughts and prayers are with those impacted by this unprecedented economic crisis. This is a tough time for our industry, but I am confident we will get through this together. First quarter started off with strong organic revenue and gross profit growth in both January and February, in addition to solid growth from Sid Wehner and Cambridge Packing, both acquired in the period. The COVID-19 pandemic started to impact our business slightly in late February and early March. The most material impact began in the final two weeks of March following the government shutdown of dining and restaurant bars, cafes, and events. During the quarter, organic net sales were 6.6% lower versus the prior year quarter. Specialty sales were down 7% organically over the prior year, which was driven by a reduction in unique customers of approximately 1.9%, lower placements of approximately 9.6%, and specialty cases lower by 5%. Organic Pounds and Center of the Plate was approximately 10% lower than the prior year quarter. Although we do not typically disclose monthly metrics, we feel it is important to communicate the path the company was on prior to the impact of COVID-19. Year-over-year volume metrics were particularly strong during the first two months of 2020. as specialty cases grew 10.8% organically versus the same period in 2019. March specifically, cases declined 28.4% versus March of 2019. Center of the plate pounds were down slightly at .07 in January and February combined versus the same two-month period the prior year and declined 22.6% in March due to significant impact of the shelter-in-place orders in our key markets. Gross profit margins decreased approximately 105 basis points during the quarter. Gross margin in the specialty category decreased 311 basis points as compared to the first quarter of 2019, while gross margin in the center of the plate category increased 156 basis points year-over-year. Excluding the impact of one-time inventory reserve estimates due to COVID-19 impact, total gross profit margins decreased 17 basis points and specialty margins decreased 154 basis points. Jim will provide more detail on margins in a few moments. Now to move on to our current priorities and actions. Many of our customers have remained open for takeout service and delivery, and we are committed to supplying and supporting them during this unprecedented time. We have also partnered with multiple retail food outlets to supply both specialty and center-of-the-plate products, and we have successfully launched Shop Like a Chef, our direct-to-consumer delivery site that we now operate alongside our Allen Brothers Great Steakhouse premium steak and seafood online platform. Like so many of our partners and customers, we have made the difficult decision to temporarily furlough certain employees such that they can take advantage of the government support. We are providing health benefits for the period of furlough and expect to allocate 10% of the profits from our new Shop Like a Chef online store to our frontline furloughed employees and others in the food service industry who have been impacted. We hope to bring back as many furloughed employees as possible as the macro environment improves over the coming months. I would also like to express my deep thanks to the Chefs' Warehouse team for their flexibility and dedication to their team members and our customers and suppliers during this challenging time. Our team quickly pivoted to service food retail outlets and rapidly developed and executed a fast-growing online platform direct to consumers. While we expect to continue to innovate and develop new business lines, we are focused on being ready to supply and support our chefs and all food service customers as they begin to fully open over the coming weeks and months. And finally, as mentioned in recent public announcements, we have taken steps to strengthen our liquidity. Before I turn it over to Jim, I'd like to express our deepest sadness for those impacted during this unprecedented time. Our industry at its heart is about community. In times of happiness and success and in more trying times like today, we are committed to being partners to chefs across the country and providing them with the highest quality ingredients and specialty food products. We are being diligent about finding creative solutions to support the restaurant industry in the coming weeks and months and know we will emerge from these trying times stronger than ever. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter. and an update on our liquidity and cost-related actions. Jim?