The Chefs' Warehouse, Inc.

Good morning, ladies and gentlemen. Welcome to the Chef's Warehouse Second Quarter 2023 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldis, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, Sal.

Thank you, Operator. Good morning, everyone. With me on today's call are Chris Pappas, Founder, Chairman, and CEO of and Jim Letty, our CFO. By now, you should have access to our second quarter 2023 earnings press release. It can also be found at www.chefswarehouse.com under the investor relations section. Throughout this conference call, we'll 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 and 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 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 and go over our second quarter results in detail. For a portion of our discussion this morning, we will refer to a few slides posted on the Chef's Warehouse website under the Investor Relations section, titled Second Quarter 2023 Earnings Presentation. Please note that these slides are disclosed at this time for illustration purposes only. 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 2023 earnings call. As we noted during our first quarter earnings report, the strong snapback in demand coming out of the Omicron variant of the COVID-19 pandemic in the second quarter of 2022 provides a difficult year over year comparison to the second quarter of 2023. As we had anticipated, for the first time since the onset of the COVID-19 pandemic, second quarter business activity returned to more normal seasonal trends. While April and May were strong months and came in as expected, in June we did experience some impact from the air quality issues from the Canadian wildfires and extreme heat and severe weather across many of our markets. In addition, volatility in certain protein categories resulted in moderate gross profit dollar pressure. Overall, For the quarter, our team delivered strong year-over-year organic revenue growth and adjusted EBITDA, and our recent acquisitions performed well. A few highlights from the second quarter as compared to the second quarter of 2022 include 8.1% organic growth in net sales. Specialty sales were up 11.4% organically over the prior year which was driven by unique customer growth of approximately 8.7%, placement growth of 11.9%, and specialty case growth of 10%. Organic pounds and center of the plate were approximately 5.9% higher than the prior year second quarter. Gross profit margins decreased approximately 43 basis points. Gross margins in the specialty category decreased 70 basis points as compared to the second quarter of 2022, while gross profit margins in the center of the play category decreased 174 basis points year over year. Jim will provide more detail on gross profit and margins in a few moments. In addition to providing the quarter results and the update to our 2023 guidance, We thought it would be helpful to share with our team members, shareholders, customers, and suppliers, as well as all interested parties, our five-year goal to leveraging the significant investments we have been making in infrastructure, capacity expansion, strategic acquisitions, and geographical growth. Please refer to the slides posted on the investor relations section of our website at www.chefswarehouse.com. Please refer to slide one. This is the Chef's Warehouse today. We have grown from approximately 1.6 billion in revenue in 2019 to an estimated 3.3 billion plus based on the guidance we updated and raised today for 2023. Along the way, we have grown our truck fleet to 1,000 plus and we now operate out of 51 distribution centers across the US, Canada, and the Middle East. The past few years, despite the impact of COVID, we continue to invest in facility expansion, new market entrance, product category growth, and most importantly, key talent. We expect to leverage these investments into profitable growth as part of our five-year goals and beyond. Please refer to slide two Our capital allocation is primarily focused on creating capacity expansion in high-value markets. We expect to drive incremental operating leverage through organic growth technology and process improvements to drive ongoing improvement in operational efficiency and investments in an easier and enhanced customer experience via continual development of our digital customer-facing platforms. We expect the growth in capacity from the infrastructure capital deployed from 2019 to date, combined with the projects coming online over the next 24 to 36 months, to create approximately 60% growth in capacity. These include our recent projects completed in Southern California, Florida, and Texas, as well as projects underway in the United Arab Emirates, the U.S. Northwest, Northern California, as well as Southern New Jersey to serve the Philadelphia region and optimize our distribution footprint in New York to the Mid-Atlantic. As we grow and scale, we expect to see the benefits of these investments as we target $5 billion in revenue and $300 plus million in adjusted EBITDA over the next five to six years. Additionally, we anticipate strengthening free cash flow as the percentage of revenue allocated to CapEx gradually moves from one and a half to two percent range down to one to one and a half percent range over time. If you refer to slide three, we are carrying certain cost increases associated with these investments in the near term. It is important to note that despite this, we have delivered first half of 2023 adjusted EBITDA growth of approximately 25% over the same period in 2022. And our full year guidance implies a similar year-over-year growth rate. As we grow and scale over the next five years, we expect to leverage these investments along with future acquisitions to deliver economies of scale continued market share gains, and gradually improving adjusted EBITDA margins over this time. The achievement of these goals will depend on our ability to continue to execute on the three primary pillars of the Chef's Warehouse unique growth model and the food away from home industry. The integration over time of acquired companies, brands, and the talent we have added and continue to add across our regions and markets. The cross-selling strategy combined with various levels of operational synergies we employ to drive acquired adjusted EBITDA margin higher over time. Generating operating leverage as we grow organically into the significant capacity creation we have invested in the last few years and we expect continue to add to key markets. We remain focused on developing, promoting, and adding the best culinary expertise and operational talent in the industry. The investments we are making, combined with our three pillars of growth, provide our teams with the right platform to enhance and grow the Chef's Warehouse business model forward. Focused on our shared vision to be the number one partner for chefs, providing them with the world's finest specialty food products and ingredients, best in breed technology, and a team dedicated to delivering superior support and service. 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?