The Chefs' Warehouse, Inc.

Greetings and welcome to the Chef's Warehouse Second Quarter 2021 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Alex Aldis, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, sir. You may begin.

Thank you, Operator. Good morning, everyone. With me on today's call are Chris Pappas, Founder, Chairman, and CEO, and Jim Letty, our CFO. By now, you should have access to our second quarter 2021 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're going to provide a business update and go over our second 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 second quarter 2021 earnings call. 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. As the quarter progressed, our customers benefited from the growth in both indoor and outdoor dining capacity, strengthening consumer demand and the early stages of menu expansion. Thanks to our teams working tirelessly in delivering the Chef's Warehouse premium products and service model to our customers in a very challenging environment, we exited June trending in line with 2019 revenue, inclusive of acquisitions added in 2020 and 2021. Similar to our previous reporting, I will compare sales and gross margin results of the current quarter sequentially to the first quarter of 2021. Jim will provide the comparison to prior year in his comments later in this call. During the quarter, net sales increased approximately 51% versus the first quarter of 2021. Specialty sales increased approximately 48.1% sequentially versus the first quarter of 2021, with average unique customers increasing 22%, and we saw higher placements of approximately 36%. Specialty cases increased 41% versus the first quarter of 2021, while center of the plate pounds sold were approximately 29.4% higher sequentially versus the first quarter of 2021, excluding the impact of acquisition. Gross profit margins increased approximately 163 basis points compared to the first quarter of 2021. Gross margin on the specialty category increased 316 basis points as compared to the first quarter of 2021, while gross margin in the center of the plate category increased 31 basis points. Jim will provide more detail on gross margin and inflation in a few minutes. In mid-June, we completed the acquisition of Nicola Imports based in Phoenix, Arizona. The addition of Nicola contributes to our continued expansion out west by growing our presence in Arizona and giving us an entry point into Denver, Colorado, a key restaurant and hospitality market that we feel will be well served by Chef's unique culture and service model going forward. On the technology and operations front, during the second quarter, we implemented several system and process improvements targeting improved efficiency in routing and warehouse management, and we now have close to 100% of our specialty locations utilizing mobile truck scanning. In addition, we completed a key enhancement to our cybersecurity platform during the quarter. Now to move on to an update on recent business activity. Recent sales have been trending generally in line with 2019 sales, inclusive of the acquisitions completed in 20 and 21 to date. As July and August are typically quieter months, revenue trends remained at similar levels coming out of June and into July. While difficult to predict at this point, there are observed expectations that the return to office buildings in certain large urban markets and continued growth in travel and hospitality could lead to additional industry growth as we move into the fall months. I would like to take this moment to express my sincere thanks to all Chef Warehouse team members across our amazing company. The extreme nature of this comeback in customer demand as markets reopened in May and June presented an unprecedented set of challenges. Their ability to execute amidst the unique dynamics in labor supply, chains, price inflation, and logistics created by the pandemic affected reopening has been a significant achievement, and we are grateful for their dedication, hard work, and expertise. Our teams not only delivered our high-quality products and service, but also worked with customers to find solutions to issues created by this unique environment. Whether it was finding the right substituting ingredients amongst our 55,000-plus products, making that last-minute delivery, or consulting on menu enhancements amidst multiple supply chain disruptions and food inflations. I would also like to thank our customers and suppliers for their cooperation and partnership during the challenging but exciting time. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity. Jim?