The Chefs' Warehouse, Inc.

Greetings, ladies and gentlemen, and welcome to the Chef's Warehouse Third Quarter 2024 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, sir.

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 third quarter 2024 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 measures 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 and go over our third 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 Third Quarter 2024 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 third quarter 2024 earnings call. Business and demand trends improved sequentially through the third quarter. Continued seasonal increase in international travel among the higher income demographic led to a slightly softer season in July and early August. Customer activity accelerated into the later half of the quarter, and momentum and demand continued into October. Our operating divisions across domestic and international markets delivered strong growth in gross profit dollars and margin, as well as continued progress, increasing relevance with our customer base with strong year-over-year growth in unique item placements. I would like to thank the entire CW team for their dedication and commitment to delivering our diverse and highly high-quality product and service in partnership with our suppliers and customers and the communities we serve. Please refer to slide three of the presentation. A few highlights from the third quarter include 5.6% organic growth in net sales. Specialty sales were up 7.5% organically over the prior year, which was driven by unique customer growth of approximately 4.7%. Placement growth of 10.8% and specialty case growth of 3.1%. Organic pounds in center of the plate were approximately 1% higher than the prior year third quarter. The year-over-year percentage pounds growth was partially impacted by attrition related to non-core lower margin business in certain markets. Gross profit margins increased approximately 58 basis points. Gross margin in the specialty category increased approximately 50 basis points as compared to the third quarter of 2023, while gross margin in the center of the plate category increased approximately 45 basis points year-over-year. Jim will provide more detail on gross profit margins in a few moments. As we progress in the growth and capital allocation plan announced during the fourth quarter of 2023, We wanted to take this opportunity to provide more detail on certain commercial and operational metrics that we expect to contribute to achieving our targeted range of financial goals by year-end 2028. In addition, we have engaged a global consulting firm to assist our teams in driving both top-line and bottom-line improvements as we target annual incremental margin gains. Please refer to slide four. Chart 1 displays trailing 12-month gross profit dollars per route as of third quarter 2024 as compared to full year 2019. Chart 2 displays adjusted operating expense as a percentage of gross profit dollars as well as the progression of adjusted EBITDA per employee for full year 2023 and estimated 2024. based on the midpoint of our current full-year guidance as compared to 2019. Across our locations, our teams continue work to improve distribution costs via multiple initiatives, which include route consolidation and internal transfer reductions in certain key markets. During 2024, we've eliminated routes and transfers in the Southwest as we opened our Arizona facility. In Northern California, as we integrated recent acquisitions with our specialty operations, and in the Northwest with our Seattle facility coming online. The consolidation of four protein processing and distribution operations in Northern California continues to progress, and we expect completion by the first quarter of 2025. Now please refer to slide five. The charts here display the progression of customer orders coming via our digital platforms, which include orders coming via mobile and website. Investments in our digital platform continue to contribute to margin enhancement as our team drives both online order adoption growth, enhancements to customer-facing functionality, and improved real-time data analytics supporting our sales teams. As of the third quarter of 2024, approximately 54% of customers ordering through our domestic specialty locations are online versus 48% in 2023 and 20% at the end of 2019. Now you could please refer to slide six. This slide provides the five primary areas our teams are focused on in order to deliver our 2028 financial targets. While we will not go into detail of every initiative on the school, we do expect to provide more color during future presentations. In addition to the metrics just discussed, we have highlighted here a number of growth and efficiency-related areas of focus. One key focus to highlight is the ongoing integration of our specialty produce and protein businesses in Texas. We are taking steps to improve operational efficiency, merge our sales teams, and incrementally grow the cross-sell of our diverse and high-quality specialty produce and protein products across our platform. The year-to-date 2024 EBITDA margin for our combined Texas operations has improved approximately 110 basis points versus the same period in 2023. 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?