The Chefs' Warehouse, Inc.

Greetings and welcome to the Chef Warehouse First Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Alex Alders, 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 first quarter 2025 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 historical adjusted net income, adjusted earnings per share, adjusted operating expenses, adjusted operating expenses as a percentage of net sales, and as a percentage of gross profit, net debt leverage and free cash flow. These measures 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 and first quarter 2025 earnings presentation. 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 first 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 First Quarter 2025 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 first quarter 2025 earnings call. First quarter of 2025 business activity displayed typical seasonal cadence as revenue trends coming out of January increased steadily into February and March. During the quarter, our business units, international and domestic, delivered strong growth in unique item placements, solid operating leverage versus the prior year first quarter. As we enter the second quarter, revenue bills during the first few weeks of April continue to display typical seasonality. I'd like to thank all our Chef's Warehouse teams, from sales and operations to all the supporting functions, for delivering a great start to 2025. I would also like to recognize our customer and supplier partners for their support and confidence in our people, quality and diversity of products, and our high-touch, flexible distribution platform. Now please refer to slide three of the presentation. A few highlights from the first quarter include 8.7% growth in net sales. Specialty sales were up 10.7% over the prior year, which was driven by unique customer growth of approximately 4.5%, placement growth of 7.7%, and specialty case growth of 5.7%. Pounds in the center of the plate were approximately 1.3% lower than the prior year first quarter. During the first quarter, we commenced attrition of certain low-margin, non-core customer business that had an impact of 0.7% lower year-over-year sales versus prior year quarter. The primary driver of the attrition was a high-volume, low-dollar commodity poultry program acquired with an acquisition. Excluding this attrition, total center-of-the-plate pounds grew growth with 3% higher than prior year first quarter. Gross profit margins decreased approximately 18 basis points. Gross margin in the specialty category increased approximately six basis points as compared to the first quarter of 2024, while gross margins in the center of the plate category decreased approximately 83 basis points year over year. Jim will provide more detail on gross profit and margins in a few moments. Now please refer to slide four. Chart 1 provides first quarter 2025 trailing 12-month update to gross profit dollars per route as compared to full year 2024 and 2019. Chart 2 provides first quarter 2025 trailing 12-month adjusted operating expense as a percentage of gross profit dollars improvements by 36 basis points versus full year 2024 and 127 basis points versus 2019. First quarter 2025 trailing 12-month adjusted EBITDA per employee increased 1% versus full year of 2024 and 19% versus 2019. Now please refer to slide five. The charts here display the progression of customer orders coming via our digital platform which include orders coming via mobile and website. As of the first quarter of 25, approximately 58% of our customers ordering through our domestic specialty locations are online versus 56% a year in 2024 and 48% a year in 2023. Investments and our digital platform contribute to improved profitability over time as our teams drive online order adoption growth, enhancements to customer-facing functionality, and real-time data analytics supporting our sales team. In addition, we continue to expand our digital footprint within Chef's Warehouse, bringing Chef's Warehouse, Middle East, and Hardee's online during the last few months. 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?