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spk02: 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.
spk03: 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?
spk04: 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?
spk05: Thank you, Chris, and good morning, everyone. I'll now provide a comparison of our current quarter operating results versus the prior year quarter and provide an update on our balance sheet and liquidity. Our net sales for the quarter ended June 25, 2021, increased approximately 111% to $423 million, from $200.5 million in the second quarter of 2020. The increase in net sales was the result of an increase in organic sales of approximately 106.1%, as well as the contribution of sales from acquisitions, which added approximately 4.9% to sales growth for the quarter. Net inflation was 11.5% in the second quarter, consisting of 10.6% inflation in our specialty category and inflation of 12.1% in our center of the plate category versus the prior year quarter. Gross profit increased 120.8% to $95.9 million for the second quarter of 2021 versus $43.4 million for the second quarter of 2020. Gross profit margins increased approximately 101 basis points to 22.7%. Multiple factors combined to drive gross profit margin improvement during the quarter, including product mix changes, volume-driven efficiencies, and effective inventory management. We were extremely pleased with our sourcing, sales, and operating teams' execution within a challenging food inflation and logistics environment. Specialty inflation was driven by broad-based inflation across most specialty product lines. Inflation in the center of the plate category was driven by higher pricing across most beef categories, partially offset by product mix changes associated with our Allen Brothers direct-to-consumer segment. Total operating expense increased approximately 32.5% to $91.2 million for the second quarter of 2021, from $68.8 million for the second quarter of 2020. The primary drivers of higher operating expense were higher compensation and transportation costs associated with higher year-over-year volume growth and route expansions. Total operating expense is inclusive of a one-time benefit of approximately $1.4 million associated with the Employee Retention Tax Credit as part of the American CARES Act. This credit has been added back to our presentation of adjusted EBITDA for the quarter. As a percentage of net sales, adjusted operating expenses were 18.6% for the second quarter of 2021 compared to 28.5% for the second quarter of 2020. 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 operating costs. Income tax benefit was 0.8 million for the second quarter of 2021, compared to 10.8 million for the second quarter of 2020. Our GAAP net income was 1.1 million or 3 cents income per diluted share for the second quarter of 2021 compared to a net loss of 20.3 million or 62 cents loss per diluted share for the second quarter of 2020. On a non-GAAP basis, we had positive adjusted EBITDA of 17.2 million for the second quarter of 2021 compared to negative adjusted EBITDA of 13.7 million for the prior year's second quarter. Adjusted net income was 1.5 million or $0.04 income per diluted share for the second quarter of 2021, compared to adjusted net loss of $18.7 million, or $0.57 loss per diluted share for the prior year's second quarter. Turning to the balance sheet and an update on our liquidity, as of June 25, 2021, we had total liquidity of $247.7 million, comprised of $146.9 million in cash, and $100.8 million of availability under our ABL facility. Net debt as of June 25, 2021, was approximately $254.5 million, inclusive of all cash and cash equivalent. At this time, due to continued uncertainty regarding the pace of broader economic recovery and the timing of event and travel-related business activity, we will not be providing guidance for 2021. We hope to provide more color as we gain more clarity on the pace of recovery outlook, and the broader post-pandemic related environment. Thank you, and at this point, we will open it up to questions. Operator?
spk02: At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation film will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Alex Blagel with Jefferies. You may proceed with your question.
spk08: Great. Thank you. Good morning, everyone.
spk05: Good morning, Alex.
spk08: Congrats. Great quarter. Maybe you could just provide some more color on how this quick ramp in demand played out and how you were able to capture so much. I know it's been a challenge hiring enough drivers and staff to raise the service levels, which I imagine possibly also provide even more flow through our margins. If you could touch on that dynamic also.
spk05: Yeah, sure. So the cadence in the quarter was – A little surprising. I mean, the big cities that had been a lag for us earlier in the year and then all through COVID, San Francisco, Chicago, and New York, they all started to open really in kind of mid to late May. And so we really started to see, as we reported earlier, Coming out of April, we were just shy of 80% of 2019. We really saw the ramp really happen in late May, and then June was kind of explosive as New York and the metro areas around the big cities really started to open. We had already seen good business activity increase. earlier in the quarter through the states that were pretty much already open. So that was a big driver. And regarding labor, you know, it continues to be a challenge. But, you know, as we stated in our prepared comments, you know, our teams really came together and and executed, delivered our product and our service model to our customers, and we were able to start to build the business back to 2019 levels.
spk08: Got it. So as we kind of think about the recent sales level and the uptick, I mean, how much of it do you think was due to sort of the spur of openings and pantry loading and sort of the unusually strong period of celebrations and everything going on in May and June, just, I guess, just trying to get a sense for what the underlying run rate trend would be as we sort of look out to the 3Q and 4Q. I know there's a lot of moving parts, but any color there would be helpful.
spk05: Sure. So, I mean, as we mentioned, recent business activity is very similar to what we saw coming out of June. We haven't, you know, obviously the second part of Q2 is always a little less busy just seasonally than May and June. So it, I'm sorry, the early part of Q3, I should say. So, you know, we haven't seen a significant change in our numbers as we've come into the more quietest seasons. So, you know, we're not providing guidance for the rest of the year But right now, we haven't seen a significant change.
spk04: Yeah. And, you know, we've got to keep reminding ourselves, you know, we still, I mean, we're back to these numbers where, you know, I think it's a little better than we expected. I mean, we knew that pent-up demand was there, but we still don't have any major events. We still don't have tourists. We still don't have real business travel. So... You know, if I had to look in a crystal ball, I would say that any of that comes back, okay, you have a tremendous, you know, fourth quarter. If it comes back partially, you still have a really good quarter. And if it just continues as is, it's just the money is changing where it's being spent. So we're still, I mean, obviously Midtown Manhattan is still not back Downtown San Francisco is not back. You know, Chicago isn't bursting at the seams. So, you know, the spending at our customers is really just continuing to be in a lot of the suburbs, a lot of the downtowns of, say, like New York City, downtown and uptown. People want to go out, you know, and travel. People are getting together. I think they're being careful. We have all sorts of outdoor dining venues now that have been added to traditional restaurants that never had it. So, you know, we continue to see the spend, the demand, and we can only be optimistic, you know, as we get through this. You know, it could be a little bumpy in the next month or two, but we think, you know, again, going into 2022, All that built-up convention business and conferences and business travel starts to come back. You know, you can't help but get really optimistic. Well, congrats.
spk08: I hope you all and the team get a chance for some vacation. I'm sure it's been busy. Thanks, Alex.
spk02: Our next question comes from the line of Kelly Bonio with BMO Capital Markets. You may proceed with your question.
spk07: Hi, good morning. Thanks for taking our questions. Hey, Kelly. Good morning. Wondering if you could just kind of unpack the sales for us a little bit. Just really curious what maybe sales per customer looks, you know, compared to 2019. How much of contribution is coming from new customers? Just trying to get a gauge of kind of market share. gains here or just how you're thinking about that, I guess, outside of the M&A activity?
spk04: Sure. Again, Kelly, it's coming from new customers. It's coming from market share. I think that our extra efforts to supply service Obviously, we don't have full employment amongst the ranks. We're not running all our trucks, and I'm sure we are disappointing some customers, but I think that our decision that we need to keep the company together rather than just do tons and tons of more layoffs and try to crank up the numbers, even though the numbers are good, I think the extra effort in offering the service that customers are used to as much as possible, obviously, was still shorthanded, allowed us to take market share. We have thousands of new customers during the pandemic, which I was so pleasantly surprised. We continue to see tons of new leases being signed. So I always say restaurateurs open restaurants, right? So You know, they're not going to let an opportunity like this to grab, you know, prime locations pass by, and we're starting to see, you know, more and more credit applications for, you know, key real estate. And, you know, there's just a lot of demand. You know, people, you know, I kind of predicted we're going to get tired of cooking. You know, I did. You know, my wife stole my pans and my knives and said we're going out. after so many months of cooking. So I think it just continues to build. You know, America loves to go out and dine, and I think that's what we're seeing. And, you know, we're nowhere near, you know, out of this and where we have vibrant midtowns of all our cities. But as you can see, the, you know, restaurants are, you know, starting to really thrive. They're shorthanded. I mean, nothing is easy right now, but... the demand is there.
spk05: Kelly, I would just add that while we don't disclose that level of detail, we are approaching, you know, we measure the average weekly customers that are actively buying. We are very close to approaching our 2019 levels. And so that's encouraging.
spk07: Okay, that's very helpful. And then also just thinking about gross margin here, I think looks like it's about 300 basis points below 2019 levels in this quarter that year. Just curious if you could talk about the factors that need to happen to get that back to normal. If you think that's possible, it maybe looks like it's largely just some more pressure in the center of plate. area? Just curious if that's accurate. How much of that is just inflation or other factors that could get us back to kind of 2019 gross margin levels?
spk05: Well, I think what you're comparing are not apples to apples. So as you recall, we adjusted our processing costs and we moved them from OPEX into gross profit per the SEC. And we did that earlier in the year. So actually, when you look on an apples-to-apples basis, that's about 150 to 170 basis points adjustment. Our prior gross profit margins were kind of between 25 and 25.5%. You really have to re-baseline that to 23.5% to 24% when you're comparing gross profit now to then. So we're really... you know, maybe 50 to 70 basis points, you know, below what you compare on an apples to apples basis. And really the difference there is just coming back to our normal volumes, you know, some of the revenue performance right now is price. And so we're not back to 100% of volume. We're getting close. And some of it is, you know, the efficiencies that come with buying on volume. Some of it is managing the inflation volatility right now. I think we're extremely happy with our team's ability to improve sequential gross profit margin as inflation exploded from Q1 into Q2. I mean, we went from mid-single digits to double-digit inflation, and we drove significant gross profit margin improvement. And really, that was not only managing price, that was better buying, that was better inventory management, really across all of our teams in the company. So as we continue to build volume back, that'll move back towards normal.
spk07: Great, and maybe early to ask this question, but just curious anything you're seeing in the business, whether it be wages or other factors that make you think about eventually at some point returning to kind of those pre-COVID margins and even maybe your longer-term kind of margin goals closer to 7%. Yeah.
spk04: I mean, it's just so hard to – predict the total future, Kelly. But, you know, I think the pivot has been, how do you do more with less? And, you know, our team has done an unbelievable job of doing that. I mean, it's not easy. You know, there's too many people working six and seven days and 20 hours a day. And, you know, we don't want that. We don't think it's healthy. It's burnouts. But we have learned a lot, and we've learned that we can do more with less. I always say nature finds a way, and necessity is the mother of invention. Couldn't be truer of what we've had to do and continue to do. So by being more efficient and asking our customers to cooperate, I don't mind this model going forward, actually prefer it. But, you know, the market will dictate, you know, if we're going to have to add, you know, more service and, you know, we're going to see where it goes. You know, we're a high-touch service model with a long tail in items, but we've kind of shortened it all up for COVID for many, many reasons, and it's a very profitable model.
spk07: Thanks very much.
spk04: Thank you.
spk02: Our next question comes from the line of Ben Clive with National Securities Corporation. You may proceed with your question.
spk01: Thank you. And this is Ben Cleaving now with Lake Street Capital Markets. But thanks for taking my question. Got a couple questions here. First around inflation. you know, curious what, if anything you can provide about kind of how, uh, inflation was really absorbed throughout the supply chain. I mean, were you guys, uh, did you guys see the, you know, the ability to kind of pass costs on, uh, were, you know, your customers able to pass those on to the, uh, to the diners? Um, and, and, you know, really how kind of, how kind of quickly was the pricing model able to adapt to, uh, inflation as it came throughout the quarter?
spk05: Uh, yeah. Thanks for the question, Ben. Um, yeah, I think, uh, Just like a lot of industries, we've observed pricing power throughout the value chain, from the manufacturers to the distributors to our customers through to the end consumers that are accepting it right now. I think when you look at inflation, it looks so pronounced versus Q2 of 2020, but the baseline effect is a big part of that. When you compare... food inflation, at least in our categories, to 2019, it's less pronounced. It's still double what is a normal for our market, you know, which is somewhere between, you know, one and three percent in normal times. But it is less pronounced. So some of that is the baseline effect that will fall away as you move further away from, you know, comping to 2020. You know, we're still seeing volatility in especially in center of the plate, although we're starting to see some easing in a number of the center of the plate categories, and that's some encouraging signs. Freight remains elevated, and that's a big part of product cost. So while freight remains elevated, we expect pricing to remain elevated, especially in imported products. But once again, I'd go back to There's a lot of pricing power in the market right now, really throughout the value chain. And, you know, until the end consumer stops accepting it, we expect it will continue for a little bit here.
spk01: Got it. That's helpful. Thanks, Jim. Jim, another question probably directed to you. Regarding cash flow and inventory build, you know, with... how dramatic the ramp was in the quarter, you know, the, the obvious need to, to, you know, refill your pantry. Where did you guys stand at the end of the quarter regarding, uh, regarding inventory levels, you know, how, uh, I know it's difficult to forecast out the next couple of quarters, but do you, do you think you guys are at kind of a, uh, you know, normalized run right now for inventory levels, or do you think you're going to need to ramp that spend up still here in the second half of the year?
spk05: Well, I mean, you know, uh, We have a really strong cash position. Our cash flow during the quarter was really some capex on our building build-outs in Florida and LA. We spent some money on acquisitions, and then we invested in working capital. Our team has done an amazing job of managing working capital, everything from bringing our DSOs down and really effectively managing inventory. So we have a significant cash position. We can easily fund additional working capital investment. I think the bulk of it happened pretty quickly, but there'll be some additional investment. We'll have some additional capex. But as we reported, we have $250 million of accessible liquidity between cash and availability on our revolvers. So We're not really concerned about that. We're looking forward to putting that capital to work to generate ongoing returns for the business going forward.
spk01: Yeah, doing noted, certainly liquidity is not an issue right now, but that was helpful color. I got one more quick one for me, and then I'll get back in queue. Didn't hear much about the Texas ramp up. Can you elaborate kind of on where you stand there, both in terms of investments and converting those investments to businesses?
spk04: Was the question about Texas ramp up?
spk05: Yeah, I mean, look, all that, you know, Chris can comment as well. You know, we made the Texas investment pre-COVID. Obviously, you know, COVID has delayed that. But actually, we're very pleased. Our Texas business has moved towards break-even faster than we expected. Some of that is the team there. really starting to build the business. Some of it is Texas being a COVID state that opened very early. So we're pleased with our progress there. I mean, we'd obviously like to do some acquisitions eventually. We haven't gotten there yet, but Chris, I don't know if you have anything you want to add about Texas.
spk04: Well, again, Texas is an investment in the future. We're continuing to hire salespeople. You know, we're looking at, you know, multiple opportunities in Houston and, you know, you have Dallas, San Antonio, Austin. So it's pretty spread out. I actually just came back spending a little bit of time on the West Coast and in Texas to see what are up and coming opportunities. I still think Texas will be a top three market for chefs. So, you know, we're basically in the first inning. at this point, but extremely excited of what we're seeing and what the team is doing and the new people that are joining us.
spk01: Perfect. Very helpful. Thanks to you both for taking my questions. Congratulations on a good quarter, and I'll get back in queue here. Thanks, Ben.
spk02: Our next question comes from the line of Todd Brooks with CL King & Associates. You may proceed with your question.
spk06: Hey, good morning, gentlemen. What a difference a year makes, huh? Hey, Todd. A couple quick questions for you. You talked about the natural kind of July-August slowdown where you're still with the acquisition still running at kind of 100% of fiscal 19. But if we think about this seasonal slowdown before what could be a fall spike with back to work, back to travel again, what's this digestion period look like? Chris, you had a couple interviews during the quarter just outlining the extreme measures that you guys were having to undertake to maintain service levels. Are we digesting this spike in demand that we've seen now? If you could just kind of qualitatively talk about the organization and what you've been able to do so that maybe we're a little bit better matched to demand trends going into the fall.
spk04: Yeah, well, you know, it's still a big headwind, you know, labor in the warehouse and qualified drivers. So um, there was more demand, uh, than we could, than we could meet. So, you know, I always hate to turn down some business, but, um, uh, you know, we had to have the discipline to say, you know, we're going to service our, uh, you know, our best customers, you know, like any other business, right. You're going to say, uh, you know, these are the people that, uh, we have the best relationships that are loyal before COVID and after COVID and, you know, customers that maybe just want, uh, an interim supplier, they're going to go back to where they were buying from before because we could service them, but their regular suppliers can't. Those people kind of fall to the back of the line. Pure capitalism, right? You're going to try to service the people that are going to be your customers of the future. The demand is there. Now it's every day we're hiring, every day I sent out a memo this morning. It's like train, but make sure you retain because it costs money to train. And it's not an easy market. And we want the best people in the industry to work for us because our customers expect the service levels. And we go down basements in the big cities and we go upstairs. And there are difficult deliveries in our major cities. So it's hard work. It was a hard job. It was hard to find these kinds of people, uh, with the work ethic and ability, uh, to do those jobs before the pandemic. So, um, you know, the pandemic actually obviously made it harder, but, uh, you know, we got great, we got great leaders. They continue to recruit. And as you can see, as you can see the numbers, um, they're executing, you know, obviously we want to get better. And I think we do get better every day, but, um, I just think the opportunity right now for our growth and take advantage of M&A and take market share has never been greater.
spk05: Hey, Todd, I'll just add that. As we talk to our operators on a weekly or even daily basis, while it's still challenging, there are initial green shoots around some easing in certain markets around finding frontline workers. So there is a little bit of positivity out there. And I would just add that You know, we're doing everything that we had started before the pandemic in terms of consolidating routes. You know, we're building new buildings where we're making investments in consolidating our operations and providing a lot of technology-based tools to our operators and our sales force and our customers to drive efficiency through the entire value chain that Chefs works in. So... it's not like we're not doing anything against it to offset it. It's an ongoing process.
spk06: Yeah, very helpful things, Jim. Second question, you talked about some early evidence of menus broadening out. Again, can we just talk about how early we are in that process? I know at the restaurant level, the operators are labor constrained too, especially in back of house, which may make it harder to do, but where do you see, where are we in that process of kind of the benefit of broader menus and what that does to case counts?
spk04: Yeah. I mean, we're getting really close to normal, which is amazing. I mean, we're not there yet because obviously all the, all the banquets are not back and, you know, that's a tremendous amount of SKUs. You know, you still don't, You still don't have the labor, obviously, in the restaurant industries. So there's still so much upside for us. Some of our most profitable categories, like pastry and all that, are still way below category sales in a normal time. But I can't complain, Todd. It's amazing to see the creativity at the restaurant. I always say, you know, restauranteurs, They multitask. They have to have a bit of expertise in finance and people management as well as being really creative at putting out food. And it's a competitive field. As more and more restaurants open, people like myself that dine out every day, you want variety. And I'm starting to see it. I'm starting to see more and more things on the menu because many people eat in the same restaurants weekly. So you've got to keep it interesting, and I think that's why we're seeing it, and that's why, you know, we're almost back to, you know, lines per customer, you know, of 2019. I think that's really the only reason it's not back to where it is is because, you know, our very large customers are not back yet.
spk06: Okay, great. And a final question. You, along this whole process, have kind of shared a goal for, what you were hoping the exit rate for fiscal 21 would be entering fiscal 22 and obviously we're all surprised by how robust the revenue recovery was in this quarter. Just wondering if it's changed your thoughts. I think previously you've talked about an 85 to 90 percent of 2019 pro forma for the acquisitions as a targeted exit rate, but where's the thinking now for what we should look like coming out of the back end of the year?
spk05: Todd, I hesitate to change our conservatism that in this environment, you want to under-promise and over-deliver, certainly, versus the reverse. You know, I think we are quite pleased. But once again, we're not back to 100% in terms of volume. We are getting there. We believe we're on the path. But, you know, look, I think we still feel that we'll come out of this as a more efficient company operator and continue to to get back to the path that we had communicated that we will, you know, we'll come out of the year at a run rate, very similar adjusted EBITDA margin range as we were prior to the pandemic. We've done a couple acquisitions since then, so we'll have to model that in. But we don't want to go out and make a bold declarative statement at this point, given that there's a couple of variables out there that, you know, that could still impact business going forward.
spk06: That's fair enough. Continued success across the third quarter.
spk05: Thank you, Todd.
spk02: Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Chris Pappas for closing remarks.
spk04: Sure. Well, we thank everybody for joining us this morning. You know, we couldn't be prouder of the job our team has done in such a challenging time. And It's just been amazing to watch them perform and execute, and we expect them to do even greater things in the future. And we look forward to everybody joining us on our next earnings call. Thank you very much.
spk02: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
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