CHEF — The Chefs' Warehouse, Inc.

Chefs' Warehouse Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Sales: Increased 11.4% to $1.059 billion from $950.7 million in Q1 2025.
• Organic Sales Growth: Up 10.4%, with specialty sales rising 6.8%.
• Gross Profit: Rose 13.9% to $257.4 million, with gross profit margins improving by 53 basis points to 24.3%.
• Operating Income: Increased to $33.1 million from $22.7 million year-over-year.
• GAAP Net Income: $17.4 million ($0.40 per diluted share), compared to $10.3 million ($0.25 per diluted share) in Q1 2025.
• Adjusted EBITDA: $60.1 million, up from $47.5 million in the prior year.
• Liquidity: Total liquidity of $278.3 million, with net debt of approximately $522 million and net debt to adjusted EBITDA at 1.9x.

2. Strategic Updates and Business Highlights

• Market Share Growth: The company reported strong year-over-year growth in volume, product penetration, unique customer growth, and profitability, driven by effective execution and investments in sales and operations.
• Customer Base: Unique customer growth was 1.9%, with an adjusted figure of approximately 4.3% when excluding attrition from exiting non-core customers in Texas.
• Operational Performance: The North American operations, which represent over 90% of the business, continued to perform well, contributing significantly to revenue growth.
• Investment in Talent: Ongoing training and development of sales and operational talent are seen as critical to long-term success.

3. Forward Guidance and Outlook

• Full Year Guidance: Maintained with net sales expected between $4.35 billion and $4.45 billion, gross profit between $1.053 billion and $1.076 billion, and adjusted EBITDA between $276 million and $286 million.
• Expectations for Q2: Anticipation of double-digit top-line growth continuing into the second quarter, bolstered by seasonal trends and upcoming events like the World Cup.

4. Bad News, Challenges, or Points of Concern

• Middle East Operations: The ongoing conflict in the Middle East has created volatility, with operations in the region currently running at about 75% of prior year levels. The impact on overall business was estimated to be a 50 basis point drag on organic growth.
• Inflationary Pressures: While inflation was managed effectively, with net inflation at 4.1%, the company remains cautious about future commodity price fluctuations and their potential impact on margins.
• Customer Demand Variability: There is uncertainty regarding customer buying patterns, particularly in the context of the Middle East situation, which could affect future performance.

5. Notable Q&A Insights

• Profitability from Middle East Business: The Middle East contributes less than 10% of overall business, and while it is a profitable segment, the current situation is viewed as a short-term challenge.
• Consumer Behavior: Management expressed optimism about consumer spending, particularly among high-end consumers, and noted that demand for premium products remains strong despite inflation.
• M&A Environment: The company is seeing some valuation adjustments in the M&A landscape but remains patient as it is not in urgent need of acquisitions.
• Growth in New Markets: Florida and Texas are highlighted as key growth areas, with Florida seeing over 20% growth, supported by recent investments in infrastructure.

Overall, Chefs' Warehouse demonstrated strong financial performance in Q1 2026, with robust growth metrics and strategic initiatives in place, despite facing challenges from geopolitical issues and inflationary pressures. The outlook remains positive, with management confident in continued growth and market share expansion.