UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June ~~24, 2022~~30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number: 001-35249

THE CHEFS’ WAREHOUSE, INC.

(Exact name of registrant as specified in its charter)

Delaware

20-3031526

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

100 East Ridge Road

Ridgefield, Connecticut 06877

(Address of principal executive offices)

Registrant’s telephone number, including area code: (203) 894-1345

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	CHEF	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock, par value $.01 per share, outstanding at July ~~25, 2022: 38,260,862~~31, 2023: 39,665,691

THE CHEFS’ WAREHOUSE, INC.

FORM 10-Q

Table of Contents

Page

PART I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (unaudited):

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1719

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

2325

Item 4.

Controls and Procedures

2325

PART II. OTHER INFORMATION

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

2325

Item 3.

Defaults Upon Senior Securities

2426

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Statements in this report regarding the business of The Chefs’ Warehouse, Inc. (the “Company”) that are not historical facts are “forward-looking statements” that involve risks and uncertainties and are based on current expectations and management estimates; actual results may differ materially. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The risks and uncertainties which could impact these statements include, but are not limited to the following: our sensitivity to general economic conditions, including disposable income levels and changes in consumer discretionary spending; our ability to expand our operations in our existing markets and to penetrate new markets through acquisitions; we may not achieve the benefits expected from our acquisitions, which could adversely impact our business and operating results; we may have difficulty managing and facilitating our future growth; conditions beyond our control could materially affect the cost and/or availability of our specialty food products or center-of-the-plate products and/or interrupt our distribution network; our increased distribution of center-of-the-plate products, like meat, poultry and seafood, involves increased exposure to price volatility experienced by those products; our business is a low-margin business and our profit margins may be sensitive to inflationary and deflationary pressures; because our foodservice distribution operations are concentrated in certain culinary markets, we are susceptible to economic and other developments, including adverse weather conditions, in these areas; fuel cost volatility may have a material adverse effect on our business, financial condition or results of operations; our ability to raise capital in the future may be limited; we may be unable to obtain debt or other financing, including financing necessary to execute on our acquisition strategy, on favorable terms or at all; interest charged on our outstanding debt may be adversely affected by changes in the method of determining ~~London Interbank Offered~~the Secured Overnight Financing Rate ~~(LIBOR), or the replacement of LIBOR with an alternative rate;~~(“SOFR”); our business operations and future development could be significantly disrupted if we lose key members of our management team; and significant public health epidemics or pandemics, including the COVID-19 pandemic, may adversely affect our business, results of operations and financial condition. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, speak only as of the date made. A more detailed description of these and other risk factors is contained in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2022~~28, 2023 and other reports, including this Quarterly Report on Form 10-Q, filed by the Company with the SEC since that date. The Company is not undertaking to update any information in the foregoing report until the effective date of its future reports required by applicable laws.

PART I FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE CHEFS’ WAREHOUSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands, except share data)


		June 24, 2022 (unaudited)		December 24, 2021			June 30, 2023		December 30, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	51,806	$	115,155	Cash and cash equivalents	$	59,592	$	158,800
Accounts receivable, net of allowance of $19,798 in 2022 and $20,260 in 2021		208,229		172,540
Accounts receivable, net of allowance of $23,673 in 2023 and $20,733 in 2022						Accounts receivable, net of allowance of $23,673 in 2023 and $20,733 in 2022	301,375		260,167
Inventories, net	Inventories, net	181,594		144,491		Inventories, net	291,917		245,693

Prepaid expenses and other current assets	Prepaid expenses and other current assets	36,323		37,774		Prepaid expenses and other current assets	60,735		56,200
Total current assets	Total current assets	477,952		469,960		Total current assets	713,619		720,860

Equipment, leasehold improvements and software, net		155,564		133,622
Property and equipment, net						Property and equipment, net	205,535		185,728
Operating lease right-of-use assets	Operating lease right-of-use assets	138,591		130,701		Operating lease right-of-use assets	182,215		156,629
Goodwill	Goodwill	237,788		221,775		Goodwill	348,951		287,120
Intangible assets, net	Intangible assets, net	118,526		104,743		Intangible assets, net	195,785		155,703
Deferred taxes, net		4,376		9,380

Other assets	Other assets	4,081		3,614		Other assets	4,884		3,256
Total assets	Total assets	$	1,136,878	$	1,073,795	Total assets	$	1,650,989	$	1,509,296
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	144,547	$	118,284	Accounts payable	$	198,087	$	163,397
Accrued liabilities	Accrued liabilities	44,817		35,390		Accrued liabilities	71,739		54,325
Short-term operating lease liabilities	Short-term operating lease liabilities	17,430		15,882		Short-term operating lease liabilities	23,104		19,428
Accrued compensation	Accrued compensation	19,292		22,321		Accrued compensation	28,486		34,167
Current portion of long-term debt	Current portion of long-term debt	4,843		5,141		Current portion of long-term debt	12,017		12,428
Total current liabilities	Total current liabilities	230,929		197,018		Total current liabilities	333,433		283,745
Long-term debt, net of current portion	Long-term debt, net of current portion	392,980		394,160		Long-term debt, net of current portion	709,073		653,504
Operating lease liabilities	Operating lease liabilities	134,714		127,296		Operating lease liabilities	175,142		151,406

Deferred taxes, net						Deferred taxes, net	7,294		6,098

Other liabilities and deferred credits	Other liabilities and deferred credits	4,568		5,110		Other liabilities and deferred credits	3,072		13,034
Total liabilities	Total liabilities	763,191		723,584		Total liabilities	1,228,014		1,107,787
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 24, 2022 and December 24, 2021		—		—
Common Stock - $0.01 par value, 100,000,000 shares authorized, 38,257,455 and 37,887,675 shares issued and outstanding at June 24, 2022 and December 24, 2021, respectively		383		380
Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 30, 2022						Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 30, 2022	—		—
Common Stock - $0.01 par value, 100,000,000 shares authorized, 39,665,691 and 38,599,390 shares issued and outstanding at June 30, 2023 and December 30, 2022, respectively						Common Stock - $0.01 par value, 100,000,000 shares authorized, 39,665,691 and 38,599,390 shares issued and outstanding at June 30, 2023 and December 30, 2022, respectively	396		386
Additional paid-in capital	Additional paid-in capital	319,364		314,242		Additional paid-in capital	347,861		337,947
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,971)		(2,022)		Accumulated other comprehensive loss	(1,911)		(2,185)
Retained earnings	Retained earnings	55,911		37,611		Retained earnings	76,629		65,361
Total stockholders’ equity	Total stockholders’ equity	373,687		350,211		Total stockholders’ equity	422,975		401,509
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,136,878	$	1,073,795	Total liabilities and stockholders’ equity	$	1,650,989	$	1,509,296

See accompanying notes to the condensed consolidated financial statements

THE CHEFS’ WAREHOUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)

(Amounts in thousands, except share and per share amounts)


		Thirteen Weeks Ended				Twenty-Six Weeks Ended					Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Net sales	Net sales	$	648,104	$	422,968	$	1,160,207	$	703,185	Net sales	$	881,820	$	648,104	$	1,601,465	$	1,160,207
Cost of sales	Cost of sales	492,100		327,094		886,690		548,364		Cost of sales	673,376		492,100		1,223,313		886,690
Gross profit	Gross profit	156,004		95,874		273,517		154,821		Gross profit	208,444		156,004		378,152		273,517
Selling, general and administrative expenses	Selling, general and administrative expenses	124,487		90,358		234,573		170,603		Selling, general and administrative expenses	179,042		124,487		335,179		234,573
Other operating expenses (income), net		3,883		857		5,046		(313)
Operating income (loss)		27,634		4,659		33,898		(15,469)
Other operating expenses, net										Other operating expenses, net	4,062		3,883		5,734		5,046
Operating income										Operating income	25,340		27,634		37,239		33,898
Interest expense	Interest expense	4,465		4,408		8,830		9,171		Interest expense	12,006		4,465		22,012		8,830

Income (loss) before income taxes		23,169		251		25,068		(24,640)
Provision for income tax expense (benefit)		6,254		(847)		6,768		(7,817)
Net income (loss)		$	16,915	$	1,098	$	18,300	$	(16,823)
Income before income taxes										Income before income taxes	13,334		23,169		15,227		25,068
Provision for income tax expense										Provision for income tax expense	3,467		6,254		3,959		6,768
Net income										Net income	$	9,867	$	16,915	$	11,268	$	18,300
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Foreign currency translation adjustments	Foreign currency translation adjustments	(74)		76		51		157		Foreign currency translation adjustments	193		(74)		274		51
Comprehensive income (loss)		$	16,841	$	1,174	$	18,351	$	(16,666)
Net income (loss) per share:
Comprehensive income										Comprehensive income	$	10,060	$	16,841	$	11,542	$	18,351
Net income per share:										Net income per share:
Basic	Basic	$	0.46	$	0.03	$	0.49	$	(0.46)	Basic	$	0.26	$	0.46	$	0.30	$	0.49
Diluted	Diluted	$	0.42	$	0.03	$	0.47	$	(0.46)	Diluted	$	0.25	$	0.42	$	0.29	$	0.47
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	37,100,968		36,831,054		37,018,044		36,615,463		Basic	37,634,127		37,100,968		37,570,595		37,018,044
Diluted	Diluted	42,053,453		37,081,186		41,896,379		36,615,463		Diluted	45,604,297		42,053,453		38,201,408		41,896,379

See accompanying notes to the condensed consolidated financial ~~statements.~~statements

THE CHEFS’ WAREHOUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands, except share amounts)

Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss

Retained
Earnings
Total
Shares Amount
Balance December 24, 2021 37,887,675 $ 380 $ 314,242 $ (2,022) $ 37,611 $ 350,211
Net income — — — — 1,385 1,385
Stock compensation 433,115 4 3,039 — — 3,043
Warrants issued for acquisition — — 1,701 — — 1,701
Cumulative translation adjustment — — — 125 — 125
Shares surrendered to pay tax withholding (64,329) (1) (2,039) — — (2,040)
Balance March 25, 2022 38,256,461 $ 383 $ 316,943 $ (1,897) $ 38,996 $ 354,425
Net income — — — — 16,915 16,915
Stock compensation 16,131 — 2,939 — — 2,939
Cumulative translation adjustment — — — (74) — (74)
Shares surrendered to pay tax withholding (15,137) — (518) — — (518)
Balance June 24, 2022 38,257,455 $ 383 $ 319,364 $ (1,971) $ 55,911 $ 373,687


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total
	Shares	Amount
Balance December 30, 2022	38,599,390	$	386	$	337,947	$	(2,185)	$	65,361	$	401,509

Net income	—	—		—		—		1,401		1,401
Stock compensation	998,777	10		4,780		—		—		4,790




Cumulative translation adjustment	—	—		—		81		—		81
Shares surrendered to pay tax withholding	(54,036)	(1)		(1,828)		—		—		(1,829)
Balance March 31, 2023	39,544,131	$	395	$	340,899	$	(2,104)	$	66,762	$	405,952

Net income	—	—		—		—		9,867		9,867
Stock compensation	53,543	—		4,704		—		—		4,704


Shares issued for acquisitions	75,008	1		2,495		—		—		2,496

Cumulative translation adjustment	—	—		—		193		—		193
Shares surrendered to pay tax withholding	(6,991)	—		(237)		—		—		(237)
Balance June 30, 2023	39,665,691	$	396	$	347,861	$	(1,911)	$	76,629	$	422,975


Balance December 25, 2020		37,274,768	$	373	$	303,734	$	(2,051)	$	42,534	$	344,590
Balance December 24, 2021													Balance December 24, 2021	37,887,675	$	380	$	314,242	$	(2,022)	$	37,611	$	350,211

Net loss		—	—		—		—		(17,921)		(17,921)
Net income													Net income	—	—		—		—		1,385		1,385
Stock compensation													Stock compensation	433,115	4		3,039		—		—		3,043

Warrants issued for acquisitions													Warrants issued for acquisitions	—	—		1,701		—		—		1,701

Cumulative translation adjustment													Cumulative translation adjustment	—	—		—		125		—		125
Shares surrendered to pay tax withholding													Shares surrendered to pay tax withholding	(64,329)	(1)		(2,039)		—		—		(2,040)
Balance March 25, 2022													Balance March 25, 2022	38,256,461	$	383	$	316,943	$	(1,897)	$	38,996	$	354,425

Net income													Net income	—	—		—		—		16,915		16,915
Stock compensation	Stock compensation	673,430	6		2,452		—		—		2,458		Stock compensation	16,131	—		2,939		—		—		2,939

Cumulative translation adjustment	Cumulative translation adjustment	—	—		—		81		—		81		Cumulative translation adjustment	—	—		—		(74)		—		(74)
Shares surrendered to pay tax withholding	Shares surrendered to pay tax withholding	(38,503)	—		(1,192)		—		—		(1,192)		Shares surrendered to pay tax withholding	(15,137)	—		(518)		—		—		(518)
Balance March 26, 2021		37,909,695	$	379	$	304,994	$	(1,970)	$	24,613	$	328,016

Net income		—	—		—		—		1,098		1,098
Stock compensation		69,245	1		3,279		—		—		3,280

Warrants issued for acquisition		—	—		1,120		—		—		1,120

Cumulative translation adjustment		—	—		—		76		—		76
Shares surrendered to pay tax withholding		(17,077)	—		(541)		—		—		(541)
Balance June 25, 2021		37,961,863	$	380	$	308,852	$	(1,894)	$	25,711	$	333,049
Balance June 24, 2022													Balance June 24, 2022	38,257,455	$	383	$	319,364	$	(1,971)	$	55,911	$	373,687

See accompanying notes to the condensed consolidated financial ~~statements.~~statements

THE CHEFS’ WAREHOUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)


		Twenty-Six Weeks Ended					Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	18,300	$	(16,823)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Net income						Net income	$	11,268	$	18,300
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	11,755		10,660		Depreciation and amortization	15,682		11,755
Amortization of intangible assets	Amortization of intangible assets	6,819		6,643		Amortization of intangible assets	10,456		6,819
Benefit for allowance for doubtful accounts		1,817		488
Provision for allowance for doubtful accounts						Provision for allowance for doubtful accounts	3,311		1,817
Non-cash operating lease expense	Non-cash operating lease expense	1,076		209		Non-cash operating lease expense	1,812		1,076
Provision (benefit) for deferred income taxes		5,004		(7,755)
Provision for deferred income taxes						Provision for deferred income taxes	990		5,004
Amortization of deferred financing fees	Amortization of deferred financing fees	1,009		1,364		Amortization of deferred financing fees	1,813		1,009

Stock compensation	Stock compensation	5,982		5,738		Stock compensation	10,581		5,982
Change in fair value of contingent earn-out liabilities	Change in fair value of contingent earn-out liabilities	3,628		(1,420)		Change in fair value of contingent earn-out liabilities	1,092		3,628
Intangible asset impairment	Intangible asset impairment	—		597		Intangible asset impairment	1,838		—
Loss on asset disposal	Loss on asset disposal	17		224		Loss on asset disposal	22		17
Changes in assets and liabilities, net of acquisitions:	Changes in assets and liabilities, net of acquisitions:					Changes in assets and liabilities, net of acquisitions:
Accounts receivable	Accounts receivable	(24,659)		(37,107)		Accounts receivable	(9,854)		(24,659)
Inventories	Inventories	(30,569)		(39,347)		Inventories	(35,450)		(30,569)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	106		(101)		Prepaid expenses and other current assets	(2,435)		106
Accounts payable, accrued liabilities and accrued compensation	Accounts payable, accrued liabilities and accrued compensation	19,733		52,541		Accounts payable, accrued liabilities and accrued compensation	453		19,733

Other assets and liabilities	Other assets and liabilities	(237)		167		Other assets and liabilities	(796)		(237)
Net cash provided by (used in) operating activities		19,781		(23,922)
Net cash provided by operating activities						Net cash provided by operating activities	10,783		19,781

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(23,490)		(9,574)		Capital expenditures	(23,155)		(23,490)
Cash paid for acquisitions, net of cash received		(52,007)		(7,165)
Cash paid for acquisitions, net of cash acquired						Cash paid for acquisitions, net of cash acquired	(119,580)		(52,007)

Net cash used in investing activities	Net cash used in investing activities	(75,497)		(16,739)		Net cash used in investing activities	(142,735)		(75,497)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Payment of debt, finance lease and other financing obligations	Payment of debt, finance lease and other financing obligations	(2,769)		(34,372)		Payment of debt, finance lease and other financing obligations	(11,680)		(2,769)

Proceeds from debt issuance		—		51,750

Payment of deferred financing fees	Payment of deferred financing fees	(406)		(1,450)		Payment of deferred financing fees	—		(406)

Surrender of shares to pay withholding taxes	Surrender of shares to pay withholding taxes	(2,558)		(1,487)		Surrender of shares to pay withholding taxes	(2,115)		(2,558)
Cash paid for contingent earn-out liability	Cash paid for contingent earn-out liability	(2,000)		(83)		Cash paid for contingent earn-out liability	(3,210)		(2,000)
Borrowings under asset-based loan facility						Borrowings under asset-based loan facility	50,000		—

Payments under asset-based loan facility		—		(20,000)

Net cash used in financing activities		(7,733)		(5,642)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	32,995		(7,733)

Effect of foreign currency on cash and cash equivalents	Effect of foreign currency on cash and cash equivalents	100		(58)		Effect of foreign currency on cash and cash equivalents	(251)		100
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(63,349)		(46,361)		Net change in cash and cash equivalents	(99,208)		(63,349)
Cash and cash equivalents-beginning of period	Cash and cash equivalents-beginning of period	115,155		193,281		Cash and cash equivalents-beginning of period	158,800		115,155
Cash and cash equivalents-end of period	Cash and cash equivalents-end of period	$	51,806	$	146,920	Cash and cash equivalents-end of period	$	59,592	$	51,806

See accompanying notes to the condensed consolidated financial ~~statements.~~statements

THE CHEFS’ WAREHOUSE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share amounts)

Note 1 - Operations and Basis of Presentation

Description of Business and Basis of Presentation

The financial statements include the condensed consolidated accounts of The Chefs’ Warehouse, Inc. (the “Company”), and its wholly-owned subsidiaries. The Company’s quarterly periods end on the thirteenth Friday of each ~~quarter. Fiscal 2022 will include a fourteenth week in the fourth~~ quarter. Every six to seven years, the Company will add a fourteenth week to its fourth quarter to more closely align its year-end to the calendar year. Fiscal 2022 contained a fourteenth week in the fourth quarter. The Company’s business consists of 3three operating segments: East, ~~Coast,~~ Midwest and West ~~Coast~~ that aggregate into 1one reportable segment, foodservice distribution, which is concentrated primarily in the United States. The Company’s customer base consists primarily of menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolateries, cruise lines, casinos, specialty food stores, grocers and warehouse clubs.

Consolidation

The unaudited condensed consolidated financial statements include all the accounts of the Company and its direct and indirect wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Unaudited Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements and the related interim information contained within the notes to such unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules of the Securities and Exchange Commission (“SEC”) for interim information and quarterly reports on Form 10-Q. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended December ~~24, 2021~~30, 2022 filed as part of the Company’s Annual Report on Form 10-K, as filed with the SEC on February ~~22, 2022.~~28, 2023.

The unaudited condensed consolidated financial statements appearing in this Form 10-Q have been prepared on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February ~~22, 2022,~~28, 2023, and in the opinion of management, include all normal recurring adjustments that are necessary for the fair statement of the Company’s interim period results. The year-end consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. Due to seasonal fluctuations ~~the COVID-19 pandemic~~ and other factors, the results of operations for the thirteen and twenty-six weeks ended June ~~24, 2022~~30, 2023 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management’s estimates.

Note 2 – Summary of Significant Accounting Policies

Revenue Recognition

Revenues from product sales are recognized at the point at which control of each product is transferred to the customer. The Company’s contracts contain performance obligations which are satisfied when customers have physical possession of each product. The majority of customer orders are fulfilled within a day and customer payment terms are typically 14 to 60 days from delivery. Shipping and handling activities are costs to fulfill the Company’s performance obligations. These costs are expensed as incurred and presented within selling, general and administrative expenses on the condensed consolidated statements of operations. The Company offers certain sales incentives to customers in the form of rebates or discounts. These sales incentives are accounted as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and records a corresponding reduction in revenue. The Company does not expect a significant

reversal in the amount of cumulative revenue recognized. Sales tax billed to customers is not included in revenue but rather recorded as a liability owed to the respective taxing authorities at the time the sale is recognized.

The following table presents the Company’s net sales disaggregated by principal product category:


		Thirteen Weeks Ended								Twenty-Six Weeks Ended									Thirteen Weeks Ended								Twenty-Six Weeks Ended
		June 24, 2022				June 25, 2021				June 24, 2022				June 25, 2021					June 30, 2023				June 24, 2022				June 30, 2023				June 24, 2022
Center-of-the-Plate	Center-of-the-Plate	$	284,286	43.9	%	$	215,089	50.9	%	$	523,062	45.1	%	$	354,934	50.5	%	Center-of-the-Plate	$	336,459	38.2	%	$	284,286	43.9	%	$	642,764	40.1	%	$	523,062	45.1	%
Dry Goods	Dry Goods	103,597		16.0	%	57,117		13.5	%	182,112		15.7	%	96,897		13.8	%	Dry Goods	162,653		18.4	%	91,852		14.2	%	284,168		17.7	%	160,648		13.8	%
Pastry	Pastry	76,320		11.8	%	41,312		9.8	%	134,071		11.6	%	70,110		10.0	%	Pastry	122,240		13.9	%	67,408		10.4	%	211,239		13.2	%	117,803		10.2	%
Cheese and Charcuterie	Cheese and Charcuterie	59,109		9.1	%	34,303		8.1	%	102,597		8.8	%	57,402		8.2	%	Cheese and Charcuterie	75,892		8.6	%	52,778		8.1	%	130,020		8.1	%	91,166		7.9	%
Produce	Produce	37,214		5.7	%	30,558		7.2	%	65,111		5.6	%	51,149		7.3	%	Produce	65,994		7.5	%	72,889		11.2	%	127,827		8.0	%	130,043		11.2	%
Dairy and Eggs	Dairy and Eggs	39,846		6.1	%	18,902		4.5	%	69,266		6.0	%	31,483		4.5	%	Dairy and Eggs	60,372		6.8	%	36,735		5.7	%	105,985		6.6	%	63,686		5.5	%
Oils and Vinegars	Oils and Vinegars	31,517		4.9	%	16,881		4.0	%	55,604		4.8	%	26,355		3.7	%	Oils and Vinegars	37,539		4.3	%	27,842		4.3	%	64,137		4.0	%	48,867		4.2	%
Kitchen Supplies	Kitchen Supplies	16,215		2.5	%	8,806		2.0	%	28,384		2.4	%	14,855		2.0	%	Kitchen Supplies	20,671		2.3	%	14,314		2.2	%	35,325		2.3	%	24,932		2.1	%
Total	Total	$	648,104	100	%	$	422,968	100	%	$	1,160,207	100	%	$	703,185	100	%	Total	$	881,820	100	%	$	648,104	100	%	$	1,601,465	100	%	$	1,160,207	100	%

The Company determines its product category classification based on how the Company currently markets its products to its customers. The Company’s definition of its principal product categories may differ from the way in which other companies present similar information.

Food Processing Costs

Food processing costs include but are not limited to direct labor and benefits, applicable overhead and depreciation of equipment and facilities used in food processing activities. Food processing costs included in cost of sales were ~~$9,398~~$16,615 and ~~$6,679~~$9,398 for the thirteen weeks ended June 30, 2023 and June 24, 2022, ~~and June 25, 2021,~~ respectively, and ~~$18,434~~$28,289 and ~~$12,075~~$18,434 for the twenty-six weeks ended June ~~24, 2022~~30, 2023 and June ~~25, 2021,~~24, 2022, respectively.

Immaterial Correction of Prior Period Disclosures

During the first quarter of fiscal 2023 and subsequent to the issuance of the fiscal year 2022 consolidated financial statements, immaterial errors were identified in the weighted average remaining amortization period of intangible assets, the intangible asset amortization schedule and the debt maturity schedule.The weighted average remaining amortization period for customer relationships, non-compete agreements and trademarks were previously disclosed as 232 months, 73 months and 250 months instead of 117 months, 25 months and 165 months, respectively. This had a corresponding immaterial impact on the intangible asset amortization schedule.

In addition, the debt maturity schedule previously included the $40,000 due upon maturity of the asset-based loan facility in the thereafter total instead of in the 2027 total. Further, the Company omitted that the asset-based loan facility and term loan are classified as Level 2 within the fair value hierarchy. These immaterial errors and omissions have been corrected in Note 4 “Fair Value Measurements”, Note 8 “Goodwill and Other Intangible Assets” and Note 9 “Debt Obligations”, within these condensed consolidated financial statements.

Note 3 – Net Income ~~(Loss)~~ per Share

The following table sets forth the computation of basic and diluted net income ~~(loss)~~ per common share:


		Thirteen Weeks Ended				Twenty-Six Weeks Ended					Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Net income (loss) per share:
Net income per share:										Net income per share:
Basic	Basic	$	0.46	$	0.03	$	0.49	$	(0.46)	Basic	$	0.26	$	0.46	$	0.30	$	0.49
Diluted	Diluted	$	0.42	$	0.03	$	0.47	$	(0.46)	Diluted	$	0.25	$	0.42	$	0.29	$	0.47
Weighted average common shares:	Weighted average common shares:									Weighted average common shares:
Basic	Basic	37,100,968		36,831,054		37,018,044		36,615,463		Basic	37,634,127		37,100,968		37,570,595		37,018,044
Diluted	Diluted	42,053,453		37,081,186		41,896,379		36,615,463		Diluted	45,604,297		42,053,453		38,201,408		41,896,379

Reconciliation of net income ~~(loss)~~ per common share:


		Thirteen Weeks Ended				Twenty-Six Weeks Ended					Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Numerator:	Numerator:									Numerator:
Net income (loss)		$	16,915	$	1,098	$	18,300	$	(16,823)
Net income										Net income	$	9,867	$	16,915	$	11,268	$	18,300
Add effect of dilutive securities	Add effect of dilutive securities									Add effect of dilutive securities
Interest on convertible notes, net of tax	Interest on convertible notes, net of tax	719		—		1,365		—		Interest on convertible notes, net of tax	1,397		719		—		1,365
Net income (loss) available to common shareholders		$	17,634	$	1,098	$	19,665	$	(16,823)
Net income available to common shareholders										Net income available to common shareholders	$	11,264	$	17,634	$	11,268	$	19,665
Denominator:	Denominator:									Denominator:
Weighted average basic common shares outstanding	Weighted average basic common shares outstanding	37,100,968		36,831,054		37,018,044		36,615,463		Weighted average basic common shares outstanding	37,634,127		37,100,968		37,570,595		37,018,044
Dilutive effect of unvested common shares	Dilutive effect of unvested common shares	263,071		250,132		296,538		—		Dilutive effect of unvested common shares	521,102		263,071		564,119		296,538
Dilutive effect of stock options and warrants	Dilutive effect of stock options and warrants	73,381		—		56,817		—		Dilutive effect of stock options and warrants	56,251		73,381		66,694		56,817
Dilutive effect of convertible notes	Dilutive effect of convertible notes	4,616,033		—		4,524,980		—		Dilutive effect of convertible notes	7,392,817		4,616,033		—		4,524,980
Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding	42,053,453		37,081,186		41,896,379		36,615,463		Weighted average diluted common shares outstanding	45,604,297		42,053,453		38,201,408		41,896,379

Potentially dilutive securities that have been excluded from the calculation of diluted net income ~~(loss)~~ per common share because the effect is anti-dilutive are as follows:


		Thirteen Weeks Ended		Twenty-Six Weeks Ended			Thirteen Weeks Ended		Twenty-Six Weeks Ended
		June 24, 2022	June 25, 2021	June 24, 2022	June 25, 2021		June 30, 2023	June 24, 2022	June 30, 2023	June 24, 2022
Restricted share awards (“RSAs”)	Restricted share awards (“RSAs”)	106,571	—	83,001	349,389	Restricted share awards (“RSAs”)	46,746	106,571	29,717	83,001
Stock options and warrants		—	103,226	—	91,779

Convertible notes	Convertible notes	—	4,616,033	91,053	4,205,246	Convertible notes	—	—	7,392,817	91,053

Note 4 – Fair Value Measurements

Assets and Liabilities Measured at Fair Value

The Company’s contingent earn-out liabilities are measured at fair value. These liabilities were estimated using Level 3 inputs. Long-term earn-out liabilities were ~~$2,793~~$928 and ~~$3,252~~$10,483 as of June ~~24, 2022~~30, 2023 and December ~~24, 2021,~~30, 2022, respectively, and are reflected as other liabilities and deferred credits on the condensed consolidated balance sheets. The remaining short-term earn-out liabilities are reflected as accrued liabilities on the condensed consolidated balance sheets. The fair value of contingent consideration was determined based on a probability-based approach which includes projected results, percentage probability of occurrence and the application of a discount rate to present value the payments. A significant change in projected results, discount rate, or probabilities of occurrence could result in a significantly higher or lower fair value measurement.

Changes in the fair value of contingent earn-out liabilities are reflected in other operating expenses, ~~(income),~~ net on the condensed consolidated statements of operations.

The following table presents the changes in Level 3 contingent earn-out liabilities:

Total

Balance December ~~24, 2021~~30, 2022

~~6,877~~17,294

Acquisition value

~~1,200~~5,835

Cash payments

~~(2,000)~~(4,250)

Changes in fair value

~~3,628~~1,092

Balance June ~~24, 2022~~30, 2023

~~9,705~~19,971

Fair Value of Financial Instruments

The carrying amounts reported in the Company’s condensed consolidated balance sheets for accounts receivable and accounts payable approximate fair value due to the immediate to short-term nature of these financial instruments. The fair values of the asset-based loan facility and term loan approximated their book values as of June 30, 2023 and December 30, 2022 as these instruments had variable interest rates that reflected current market rates available to the Company and are classified as Level 2 fair value measurements.

The following table presents the carrying value and fair value of the Company’s convertible ~~notes.~~notes and GreenLeaf Note. The fair value of the Company’s 2028 Convertible Senior Notes was based on Level 1 inputs. In estimating the fair value of ~~the convertible notes,~~its 2024 Convertible Senior Notes and Convertible Unsecured Note, the Company utilized Level 3 inputs including prevailing market interest rates to estimate the debt portion of the instrument and a Black Scholes valuation model to estimate the fair value of the conversion option. The Black Scholes model utilizes the market price of the Company’s common stock, estimates of the stock’s volatility and the prevailing risk-free interest rate in calculating the fair value estimate. The fair value of the GreenLeaf Note was determined based upon observable market prices of similar debt instruments. The Convertible Unsecured Note matured on June 29, 2023 and was repaid in full.

June 24, 2022 December 24, 2021
Carrying Value Fair Value Carrying Value Fair Value
Convertible Senior Notes $ 200,000 $ 223,854 $ 200,000 $ 206,182
Convertible Unsecured Note $ 4,000 $ 4,474 $ 4,000 $ 4,102


		June 30, 2023				December 30, 2022
	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
2028 Convertible Senior Notes	Level 1	$	287,500	$	302,338	$	287,500	$	292,531
2024 Convertible Senior Notes	Level 3	$	39,684	$	41,070	$	41,684	$	43,723
GreenLeaf Note	Level 2	$	10,000	$	9,706	$	—	$	—
Convertible Unsecured Note	Level 3	$	—	$	—	$	4,000	$	4,345

Note 5 – Acquisitions

~~During the second quarter of fiscal 2022,~~GreenLeaf

On May 1, 2023, the Company ~~completed 2 acquisitions for an aggregate~~entered into a stock purchase agreement to acquire substantially all of the equity interests of Oakville Produce Partners, LLC (“GreenLeaf”), a leading produce and specialty food distributor in Northern California. The final purchase price was $86,124 consisting of ~~approximately $22,500,~~$72,157 paid in cash at closing, $1,471 paid upon settlement of a net working capital true-up, the issuance of a $10,000 unsecured note and 75,008 shares of the Company’s common stock with an approximate value of $2,496 based on the trading price of the Company’s common stock on the date of acquisition. The acquisition was partially funded by a $40,000 incremental draw on the Company’s asset-based loan facility. The Company’s purchase price allocation is preliminary and is subject to ~~customary working capital adjustments. The~~revision pending the valuation of goodwill and intangible assets acquired. This valuation is incomplete as of June 30, 2023 as the Company ~~will also pay additional contingent consideration, if earned, in the form of earn-out amounts which could total $2,000 in the aggregate. The Company~~ is currently in the process of ~~finalizing a~~completing its assessment of valuation ~~of the tangible~~inputs and ~~intangible assets as of the acquisition date.~~assumptions. When applicable, these valuations require the use of Level 3 inputs. ~~Goodwill of $3,947 will be amortized over 15 years for tax purposes.~~

~~Capital Seaboard~~

On December 28, 2021, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of CGC Holdings, Inc. (“Capital Seaboard”), a specialty seafood and produce distributor in Maryland. The purchase price was approximately $31,036, consisting of $28,000 paid in cash at closing, common stock warrants valued at $1,701, and $1,335 paid upon settlement of a net working capital true-up. The Company is in the process of finalizing a valuation of tangible and intangible assets of Capital Seaboard as of the acquisition date. When applicable, these valuations require the use of Level 3 inputs. GoodwillAll goodwill for the ~~Capital Seaboard~~GreenLeaf acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established specialty ~~seafood and~~ produce distributor to leverage the Company’s existing products in the markets served by ~~Capital Seaboard, to supply Capital Seaboard’s product offerings to our East Coast markets~~GreenLeaf and any intangible assets that do not qualify for separate ~~recognition.~~recognition, including assembled workforce. The intangible assets acquired consisted of customer relationships and trademarks valued at $27,760 and $2,900, respectively, as of the acquisition date. The customer relationships and trademarks are being amortized over 10 years.

Hardie’s Fresh Foods

On March 20, 2023, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of Hardie’s F&V, LLC (“Hardie’s Fresh Foods”), a specialty produce distributor with operations in Texas. The initial purchase price was approximately $42,070, consisting of $38,000 paid in cash at closing, subject to customary net working capital adjustments, and an earn-out liability valued at approximately $4,070 as of the acquisition date. If earned, the earn-out liability could total up to $10,000 over a two-year period. The payment of the earn-out liability is subject to the successful achievement of certain EBITDA targets. The Company’s purchase price allocation is preliminary and is subject to revision pending the valuation of goodwill and intangible assets acquired. This valuation is incomplete as of June 30, 2023 as the Company is currently in the process of completing its assessment of valuation inputs and assumptions as well as opening working capital. When applicable, these valuations require the use of Level 3 inputs. All goodwill for the Hardie’s Fresh Foods acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established specialty produce distributor to leverage the Company’s existing products in the markets served by Hardie’s Fresh Foods and any intangible

assets that do not qualify for separate recognition, including assembled workforce. The intangible assets acquired consisted of customer relationships and trademarks valued at $13,800 and $3,600, respectively, as of the acquisition date. The customer relationships and trademarks are being amortized over 10 years, and 5 years, respectively.

Other Fiscal 2023 Acquisitions

During the twenty-six weeks ended June 30, 2023, the Company completed three other acquisitions for an aggregate initial purchase price of approximately $16,851, consisting of $12,971 paid in cash at closing, subject to customary working capital adjustments, earn-out liabilities valued at approximately of $1,665 as of the dates of acquisition, and $2,215 of deferred payments. If earned, these earn-out liabilities could total up to $2,562 in the aggregate. The Company’s aggregate purchase price allocation is preliminary and is subject to revision pending the valuations of goodwill and intangible assets acquired. This valuation is incomplete as of June 30, 2023 as the Company is currently in the process of completing its assessment of valuation inputs and assumptions as well as opening working capital. When applicable, these valuations require the use of Level 3 inputs. All goodwill of $5,891 will be amortized over 15 years for tax purposes. The intangible assets acquired consisted of customer relationships valued at $4,276 as of the acquisition dates. The customer relationships are being amortized over 10 years.

The Company reflected net sales and income before income taxes in its condensed consolidated statement of operations related to the ~~Capital Seaboard acquisition~~fiscal 2023 acquisitions as follows:


		Thirteen Weeks Ended		Twenty-Six Weeks Ended			Thirteen Weeks Ended	Twenty-Six Weeks Ended
		June 24, 2022			June 24, 2022					June 30, 2023		June 30, 2023
Net sales	Net sales	$	38,671		$	70,353			Net sales	$	100,181	$	120,403
Income before income taxes	Income before income taxes	$	1,759		$	2,892			Income before income taxes	$	4,428	$	6,188

Chef Middle East

On November 1, 2022, pursuant to a share sale and purchase agreement, the Company acquired substantially all of the shares of Chef Middle East LLC (“CME”), a specialty food distributor with operations in the United Arab Emirates, Qatar and Oman. The final purchase price was approximately $116,515, consisting of $108,749 paid in cash at closing, $166 paid upon settlement of a net working capital true-up, and an earn-out liability valued at $7,600 as of the date of acquisition. If earned, the earn-out liability could total up to $10,000 over a two-year period. The measurement period adjustments recorded through the second quarter of fiscal 2023 resulted in a goodwill increase of $735, a decrease in inventories of $735, an increase in the earn-out liability of $100, an increase in accrued liabilities of $313, a decrease in other assets of $82, and a decrease in deferred tax liabilities of $35. The valuation of tangible and intangible assets acquired has been completed as of June 30, 2023. The intangible assets acquired consists of customer relationships, trademarks, and non-compete agreements valued at $25,800, $11,400, and $320, respectively, as of the acquisition date. The customer relationships, trademarks, and non-compete agreements are being amortized over 10, 15, and 3 years, respectively.

Pro forma Financial Information

The table below presents unaudited pro forma condensed consolidated income statement information of the Company as if the GreenLeaf and Hardie’s Fresh Foods acquisitions had occurred on December 25, 2021, and the CME acquisition had occurred on December 26, 2020. The pro forma results were prepared from financial information obtained from the sellers of the business, as well as information obtained during the due diligence process associated with the acquisitions. The pro forma information is not necessarily indicative of the Company’s results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, any incremental costs for transitioning to become a public company, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information reflects amortization and depreciation of the acquisitions at their respective fair ~~values.~~value. CME did not have a pro forma impact during the thirteen and twenty-six weeks ended June 30, 2023 as it was included in the condensed consolidated results of operations for the entire period.


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Net sales	$	892,161	$	788,182	$	1,695,649	$	1,435,104
Income before income taxes	$	13,617	$	28,513	$	16,752	$	39,144

Thirteen Weeks Ended Twenty-Six Weeks Ended
June 24, 2022 June 25, 2021 June 24, 2022 June 25, 2021
Net sales $ 667,413 $ 477,733 $ 1,179,516 $ 801,188
Income (loss) before income taxes $ 23,169 $ 1,077 $ 25,068 $ (24,450)

The table below sets forth the ~~preliminary purchase price allocation for these acquisitions:~~total assets acquired and liabilities assumed:


		Capital Seaboard		Other Acquisitions			Chef Middle East		Hardie’s Fresh Foods		GreenLeaf		Other Acquisitions
Current assets	Current assets	$	10,130	$	8,834	Current assets	$	84,076	$	27,479	$	16,068	$	9,783
Customer relationships	Customer relationships	7,250		10,410		Customer relationships	25,800		13,800		27,760		4,276
Trademarks	Trademarks	2,280		620		Trademarks	11,400		3,600		2,900		—

Non-compete agreements						Non-compete agreements	320		—		—		—
Goodwill	Goodwill	8,334		8,537		Goodwill	24,548		7,990		46,055		5,891
Fixed assets	Fixed assets	9,552		197		Fixed assets	16,953		5,582		2,477		497
Other assets	Other assets	122		17		Other assets	859		854		104		—
Deferred tax liability						Deferred tax liability	(3,600)		—		—		(241)
Right-of-use assets						Right-of-use assets	5,321		13,303		2,026		3,258

Lease liabilities						Lease liabilities	(5,321)		(13,303)		(2,026)		(3,258)

Current liabilities						Current liabilities	(43,841)		(17,235)		(9,240)		(3,336)

Other long-term liabilities						Other long-term liabilities	—		—		—		(19)

Current liabilities		(6,632)		(4,915)
Earn-out liability		—		(1,200)

Issuance of warrants		(1,701)		—

Total cash consideration		$	29,335	$	22,500
Total						Total	$	116,515	$	42,070	$	86,124	$	16,851

The Company recognized professional fees ~~of $1,019 in operating expenses~~ related to acquisition ~~related~~ activities inof $1,385 and $1,019 during the ~~second quarter~~thirteen weeks ended June 30, 2023 and June 24, 2022, respectively, and $2,628 and $1,862 during the twenty-six weeks ended June 30, 2023 and June 24, 2022, respectively, presented within otheroperating expenses, net on the condensed consolidated statements of ~~fiscal 2022.~~operations.

Note 6 – Inventories

Inventories consist primarily of finished product and are reflected net of adjustments for shrinkage, excess and obsolescence to approximate their net realizable value totaling ~~$9,315~~$10,187 and ~~$8,312~~$9,198 at June ~~24, 2022~~30, 2023 and December ~~24, 2021,~~30, 2022, respectively.

Note 7 – ~~Equipment, Leasehold Improvements~~Property and ~~Software~~Equipment

~~Equipment, leasehold improvements~~Property and ~~software~~equipment as of June ~~24, 2022~~30, 2023 and December ~~24, 2021~~30, 2022 consisted of the following:


		Useful Lives	June 24, 2022		December 24, 2021			Useful Lives	June 30, 2023		December 30, 2022
Land	Land	Indefinite	$	5,542	$	5,020	Land	Indefinite	$	5,542	$	5,542
Buildings	Buildings	20 years	23,443		18,406		Buildings	20 years	40,704		39,893
Machinery and equipment	Machinery and equipment	5 - 10 years	30,067		28,099		Machinery and equipment	5 - 10 years	34,722		32,107
Computers, data processing and other equipment	Computers, data processing and other equipment	3 - 7 years	16,386		15,480		Computers, data processing and other equipment	3 - 7 years	20,326		18,475
Software	Software	3 - 7 years	40,098		39,799		Software	3 - 7 years	48,544		42,609
Leasehold improvements	Leasehold improvements	1 - 40 years	92,552		69,105		Leasehold improvements	1 - 40 years	124,386		94,245
Furniture and fixtures	Furniture and fixtures	7 years	3,671		3,582		Furniture and fixtures	7 years	3,883		3,825
Vehicles	Vehicles	5 - 10 years	28,007		29,632		Vehicles	5 - 10 years	34,810		31,462

Construction-in-process	Construction-in-process		23,870		24,355		Construction-in-process		21,987		36,583
			263,636		233,478				334,904		304,741
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization		(108,072)		(99,856)		Less: accumulated depreciation and amortization		(129,369)		(119,013)
Equipment, leasehold improvements and software, net			$	155,564	$	133,622
Property and equipment, net							Property and equipment, net		$	205,535	$	185,728

Construction-in-process at June ~~24,~~30, 2023 related primarily to the build-out of the Company’s Richmond, CA and Gibbstown, NJ distribution facilities and at December 30, 2022 related primarily to the build-out of the Company’s Miami, Dallas and Richmond, CA distribution facilities and the implementation of the Company’s Enterprise Resource Planning (“ERP”) system and the build-out of the Company’s Miami distribution facility and at December 24, 2021 related primarily to the build-outs of the Company’s Miami and Los Angeles distribution facilities.system. The net book value of equipment financed under finance leases at June ~~24, 2022~~30, 2023 and December ~~24, 2021~~30, 2022 was ~~$9,774~~$12,572 and ~~$10,874,~~$11,579, respectively.

The components of depreciation and amortization expense were as follows:


		Thirteen Weeks Ended				Twenty-Six Weeks Ended					Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Depreciation expense	Depreciation expense	$	4,385	$	3,841	$	8,800	$	7,776	Depreciation expense	$	7,132	$	4,385	$	12,674	$	8,800
Software amortization	Software amortization	$	1,481	$	1,712	$	2,955	$	2,884	Software amortization	$	1,539	$	1,481	$	3,008	$	2,955
		$	5,866	$	5,553	$	11,755	$	10,660		$	8,671	$	5,866	$	15,682	$	11,755

Note 8 – Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are presented as follows:






Carrying amount as of December ~~24, 2021~~30, 2022	$	~~221,775~~287,120
Goodwill adjustments (1)	~~(792)~~1,859
Acquisitions	~~16,871~~59,936
Foreign currency translation	~~(66)~~36
Carrying amount as of June ~~24, 2022~~30, 2023	$	~~237,788~~348,951

(1) The goodwill adjustments represent measurement period adjustments related to certain acquisitions completed in the prior year.

Other intangible assets as of June ~~24, 2022~~30, 2023 and December ~~24, 2021~~30, 2022 consisted of the following:


June 24, 2022		Weighted-Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Amount
June 30, 2023									June 30, 2023	Weighted-Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	Customer relationships	120 months	$	173,387	$	(79,952)	$	93,435	Customer relationships	111 months	$	249,628	$	(93,433)	$	156,195

Trademarks									Trademarks	148 months	57,655		(18,484)		39,171
Non-compete agreements	Non-compete agreements	20 months	8,579		(8,151)		428		Non-compete agreements	21 months	8,899		(8,480)		419
Trademarks		163 months	39,407		(14,744)		24,663
Total	Total		$	221,373	$	(102,847)	$	118,526	Total		$	316,182	$	(120,397)	$	195,785


December 24, 2021		Weighted-Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Amount
December 30, 2022									December 30, 2022	Weighted-Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	Customer relationships	120 months	$	155,678	$	(74,644)	$	81,034	Customer relationships	117 months	$	205,608	$	(85,447)	$	120,161
Trademarks									Trademarks	165 months	51,137		(16,201)		34,936
Non-compete agreements	Non-compete agreements	26 months	8,579		(8,018)		561		Non-compete agreements	25 months	8,899		(8,293)		606
Trademarks		179 months	36,514		(13,366)		23,148
Total	Total		$	200,771	$	(96,028)	$	104,743	Total		$	265,644	$	(109,941)	$	155,703

Amortization expense for other intangibles was ~~$3,463~~$5,759 and ~~$3,104~~$3,463 for the thirteen weeks ended June 30, 2023 and June 24, 2022, ~~and June 25, 2021,~~ respectively, and ~~$6,819~~$10,456 and ~~$6,643~~$6,819 for the twenty-six weeks ended June ~~24, 2022~~30, 2023 and June ~~25, 2021,~~24, 2022, respectively.

The Company recognized a customer relationships intangible asset impairment charge of $1,838 related to the loss of a significant Hardie’s Fresh Foods customer post acquisition. The Company’s valuation of the Hardie’s Fresh Foods’ customer list intangible asset as of the acquisition date, a Level 3 measurement, was based on an income approach using the excess earnings method which requires significant assumptions including future sales forecasts and a discount rate. The impairment charge was measured by reducing its assumption of future sales for the significant customer lost post-acquisition to zero.The impairment charge is presented within other operating expenses, net on the condensed consolidated statements of operations.

Estimated amortization expense for other intangible assets for the remainder of the fiscal year ending December ~~30, 2022~~29, 2023 and each of the next four fiscal years and thereafter is as follows:


2022		$	6,784
2023	2023	13,058		2023	$	10,940
2024	2024	12,200		2024	21,428
2025	2025	11,784		2025	21,130
2026	2026	11,784		2026	21,017
2027				2027	20,449
Thereafter	Thereafter	62,916		Thereafter	100,821
Total	Total	$	118,526	Total	$	195,785

Note 9 – Debt Obligations

Debt obligations as of June ~~24, 2022~~30, 2023 and December ~~24, 2021~~30, 2022 consisted of the following:


		June 24, 2022		December 24, 2021			Weighted Average Effective Interest Rate at June 30, 2023		Maturity	June 30, 2023		December 30, 2022
Senior secured term loans	Senior secured term loans	$	167,819	$	168,675	Senior secured term loans	10.61	%	August 2029	$	297,750	$	299,250
Convertible senior notes		200,000		200,000
2028 Convertible senior notes						2028 Convertible senior notes	2.77	%	December 2028	287,500		287,500
2024 Convertible senior notes						2024 Convertible senior notes	2.34	%	December 2024	39,684		41,684
Asset-based loan facility	Asset-based loan facility	20,000		20,000		Asset-based loan facility	6.80	%	March 2027	90,000		40,000
Finance lease and other financing obligations		10,201		11,602

Finance leases and other financing obligations						Finance leases and other financing obligations	5.38	%	Various	24,528		13,548
Convertible unsecured note	Convertible unsecured note	4,000		4,000		Convertible unsecured note	—	%	June 2023	—		4,000

Deferred finance fees and original issue premium (discount)		(4,197)		(4,976)
Unamortized deferred costs and premium						Unamortized deferred costs and premium				(18,372)		(20,050)
Total debt obligations	Total debt obligations	397,823		399,301		Total debt obligations				721,090		665,932
Less: current installments	Less: current installments	(4,843)		(5,141)		Less: current installments				(12,017)		(12,428)
Total debt obligations excluding current installments	Total debt obligations excluding current installments	$	392,980	$	394,160	Total debt obligations excluding current installments				$	709,073	$	653,504

~~On March 11, 2022,~~In connection with the GreenLeaf acquisition, the Company ~~entered into~~issued a ~~third amendment to its asset-based loan facility (“ABL Facility”) which increased~~$10,000 unsecured note bearing interest of 4.47%. The principal on the ~~aggregate commitments from $150,000 to $200,000. The interest rate charged~~unsecured note is due in two equal installments on ~~borrowings~~April 30, 2024 and 2025 and is presented under the ~~ABL Facility is equal to a spread plus, at the Company’s option, either the Base Rate (as defined~~caption “Finance leases and other financing obligations” in the ~~ABL Credit Agreement) or a forward-looking term rate based~~table above. The convertible unsecured note matured on ~~the secured overnight financing rate term (except~~June 29, 2023 and was repaid in full, including all accrued interest, for swingline loans) for one-, three-, or six-month interest periods chosen by the Company. The ABL Facility matures on March 11, 2027 subject to a springing maturity date of March 24, 2025 should the Company’s term loan not have been extended to at least March 11, 2027 or March 24, 2024 if the Company’s 1.875% Convertible Senior Notes due 2024$4,049 in ~~an aggregate principal amount in excess of $40,000 remain outstanding having a maturity date not earlier than six months after March 11, 2027.~~cash.

The ABL Credit Agreement contains customary affirmative covenants, negative covenants and events of default as more particularly described in the ABL Credit Agreement. The Company is required to comply with a minimum consolidated fixed charge coverage ratio of 1:1 if the amount of availability under the ABL Facility falls below $14,000, or 10%,Maturities of the ~~lesser~~Company’s debt, excluding finance leases, for the remainder of the ~~aggregate commitments~~fiscal year ending December 29, 2023 and ~~the borrowing base then in effect.~~

~~The third amendment was accounted for as a debt modification. The Company incurred transaction costs of $406 which were capitalized as deferred financing fees, presented in other assets~~ ~~on the Company’s consolidated balance sheets~~, ~~to be amortized over the term~~each of the ~~ABL Facility.~~next four fiscal years and thereafter is as follows:


2023	$	1,500
2024	47,684
2025	8,000
2026	3,000
2027	93,000
Thereafter	571,750
Total	$	724,934

The net carry value of the Company’s ~~Convertible Senior Notes~~convertible notes as of June ~~24, 2022~~30, 2023 and December ~~24, 2021~~30, 2022 was:

June 24, 2022 December 24, 2021
Principal amount outstanding $ 200,000 $ 200,000
Unamortized deferred financing fees and premium (2,238) (2,686)
Net carry value $ 197,762 $ 197,314


	June 30, 2023						December 30, 2022
	Principal Amount		Unamortized Deferred Costs and Premium		Net Amount		Principal Amount		Unamortized Deferred Costs and Premium		Net Amount
2028 Convertible Senior Notes	$	287,500	$	(6,303)	$	281,197	$	287,500	$	(6,876)	$	280,624
2024 Convertible Senior Notes	39,684		(278)		39,406		41,684		(373)		41,311
Convertible Unsecured Note	—		—		—		4,000		—		4,000
Total	$	327,184	$	(6,581)	$	320,603	$	333,184	$	(7,249)	$	325,935

The components of interest expense on the Company’s ~~Convertible Senior Notes~~convertible notes were as follows:

Thirteen Weeks Ended Twenty-Six Weeks Ended
June 24, 2022 June 25, 2021 June 24, 2022 June 25, 2021
Coupon interest $ 938 $ 938 $ 1,875 $ 1,719
Amortization of deferred financing fees and premium $ 224 $ 224 $ 448 $ 465
Total interest $ 1,162 $ 1,162 $ 2,323 $ 2,184

The Company’s senior secured term loan credit agreement requires the Company to maintain at least $35,000 of liquidity as of the last day of any fiscal quarter where EBITDA, as defined in the Credit Agreement, is less than $10,000. The Company had minimum liquidity, as defined in the Credit Agreement, of $222,514 as of June 24, 2022.


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Coupon interest	$	1,893	$	938	$	3,792	$	1,875
Amortization of deferred costs and premium	333		224		668		448

Total interest	$	2,226	$	1,162	$	4,460	$	2,323

As of June ~~24, 2022,~~30, 2023, the Company had reserved ~~$20,541~~$24,170 of the ~~ABL Facility~~asset-based loan facility for the issuance of letters of ~~credit. As of June 24, 2022,~~credit and funds totaling ~~$159,460~~$85,830 were available for borrowing under the ABL Facility. At June 24, 2022, the interest rate charged on the Company’s senior secured term loan was approximately 6.6% and the interest rate charged on the Company’s ABL Facility was approximately 4.5%.borrowing.

Note 10 – Stockholders’ Equity

Equity Awards

The following table reflects the activity of RSAs during the twenty-six weeks ended June ~~24, 2022:~~30, 2023:


		Time-based			Performance-based			Market-based				Time-based			Performance-based			Market-based
		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value

Unvested at December 24, 2021		617,996	$	28.33	187,437	$	32.04	185,129	$	31.44
Unvested at December 30, 2022											Unvested at December 30, 2022	464,972	$	31.74	335,425	$	32.25	333,114	$	30.30
Granted	Granted	154,822	27.32		167,261	32.44		167,261	29.12		Granted	224,634	32.71		742,744	33.17		87,942	28.84
Vested	Vested	(313,174)	26.38		—	—		—	—		Vested	(208,936)	31.76		—	—		—	—
Forfeited	Forfeited	(12,094)	29.13		(14,001)	32.14		(14,003)	30.82		Forfeited	(3,000)	34.48		—	—		—	—
Unvested at June 24, 2022		447,550	$	29.32	340,697	$	32.23	338,387	$	30.32
Unvested at June 30, 2023											Unvested at June 30, 2023	477,670	$	32.17	1,078,169	$	32.88	421,056	$	30.00

The Company granted ~~489,344~~1,055,320 RSAs to its employees ~~and directors~~ at a weighted average grant date fair value of ~~$30.50~~$32.71 during the twenty-six weeks ended June ~~24, 2022.~~30, 2023. These awards are a mix of time-, market- and performance-based grants that generally vest over a range of periods up to ~~four~~five years. The Company recognized expense totaling ~~$2,939~~$4,704 and ~~$3,280~~$2,939 on its RSAs during the thirteen weeks ended June 30, 2023 and June 24, 2022, ~~and June 25, 2021,~~ respectively, and ~~$5,982~~$9,494 and ~~$5,738~~$5,982 during the twenty-six weeks ended June ~~24, 2022~~30, 2023 and June ~~25, 2021,~~24, 2022, respectively.

At June ~~24, 2022,~~30, 2023, the total unrecognized compensation cost for unvested RSAs was ~~$23,850~~$34,735 and the weighted-average remaining period was approximately ~~2.2~~1.3 years. Of this total, ~~$11,916~~$12,783 related to RSAs with time-based vesting provisions and ~~$11,934~~$21,952 related to RSAs with ~~performance-based~~performance- and market-based vesting provisions. At June ~~24, 2022,~~30, 2023, the weighted-average remaining period for time-based vesting and performance-based vesting RSAs were approximately ~~2.1~~2.2 years and ~~2.2~~0.7 years, respectively.

No share-based compensation expense related to the Company’s RSAs or stock options has been capitalized. As of June ~~24, 2022,~~30, 2023, there were ~~2,088,866~~1,088,116 shares available for grant under the 2019 Omnibus Equity Incentive Plan.

The following table summarizes stock option activity during the twenty-six weeks ended June 30, 2023:


	Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (in years)




Outstanding December 30, 2022	112,232	$	20.23	$	1,465	3.2

Exercised	—	—

Outstanding June 30, 2023	112,232	$	20.23	$	1,743	2.7
Exercisable at June 30, 2023	112,232	20.23		$	1,743	2.7

In connection with the CME acquisition, the Company issued stock awards to certain members of the CME management team

which were classified as liabilities. These awards vest over a period of up to 4 years. Stock-based compensation expense for

these awards was $544 and $0 during the thirteen weeks ended June 30, 2023 and June 24, 2022, respectively, and $1,087 and $0 during the twenty-six weeks ended June 30, 2023 and June 24, 2022, respectively. The fair value of these awards was $1,450 and $362 as of June 30, 2023 and December 30, 2022, respectively, and is presented within

Other liabilities and deferred credits on the Company’s condensed consolidated balance sheets.

Note 11 – Related Parties

The Chefs’ Warehouse Mid-Atlantic, LLC, a subsidiary of the Company, leases a distribution facility that is 100% owned by entities controlled by Christopher Pappas, the Company’s ~~chairman, president~~Chairman, President and ~~chief executive officer,~~Chief Executive Officer, and John Pappas, the Company’s ~~vice chairman~~Vice Chairman and one of its directors, and are deemed to be affiliates of these individuals. Expense related to this facility totaled $123 during the thirteen weeks ended June ~~24, 2022~~30, 2023 and June ~~25, 2021,~~24, 2022, and $246 during the twenty-six weeks ended June ~~24, 2022~~30, 2023 and June ~~25, 2021.~~24, 2022.

Note 12 – Income Taxes

The Company’s effective tax rate was 26.0% and 27.0% for the thirteen weeks and twenty-six weeks-ended June 30, 2023 and June 24, 2022, respectively. The effective tax rate varies from the 21% statutory rate primarily due to state taxes. The lower effective tax rate for the thirteen weeks and twenty-six weeks-ended June 30, 2023 was primarily driven by a greater mix of foreign earnings that are subject to tax rates below the US statutory rate of 21%. The Company’s income tax provision reflects the impact of an expected income tax refund receivable of $21,250 as of June 30, 2023 which is reflected in prepaid expenses and other current assets on the Company’s consolidated balance sheet.

Note 1213 – Supplemental Disclosures of Cash Flow Information


		Twenty-Six Weeks Ended					Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Cash received for income taxes		$	(239)	$	(208)
Cash paid (received) for income taxes						Cash paid (received) for income taxes	$	10,673	$	(239)
Cash paid for interest, net of cash received	Cash paid for interest, net of cash received	$	7,718	$	7,766	Cash paid for interest, net of cash received	$	20,266	$	7,718
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	13,837	$	12,752	Operating cash flows from operating leases	$	18,591	$	13,837
Operating cash flows from finance leases	Operating cash flows from finance leases	$	223	$	282	Operating cash flows from finance leases	$	336	$	223
Other non-cash investing and financing activities						Other non-cash investing and financing activities
ROU assets obtained in exchange for lease liabilities:	ROU assets obtained in exchange for lease liabilities:					ROU assets obtained in exchange for lease liabilities:
Operating leases	Operating leases	$	20,116	$	1,625	Operating leases	$	42,182	$	20,116
Finance leases	Finance leases	$	411	$	162	Finance leases	$	3,684	$	411
Other non-cash investing and financing activities:	Other non-cash investing and financing activities:					Other non-cash investing and financing activities:
Warrants issued for acquisitions	Warrants issued for acquisitions	$	1,701	$	1,120	Warrants issued for acquisitions	$	—	$	1,701

Common stock issued for acquisitions						Common stock issued for acquisitions	$	2,496	$	—

Unsecured notes issued for acquisitions						Unsecured notes issued for acquisitions	$	10,000	$	—
Contingent earn-out liabilities for acquisitions	Contingent earn-out liabilities for acquisitions	$	1,200	$	3,400	Contingent earn-out liabilities for acquisitions	$	5,835	$	1,200

Note 1314 – Subsequent Events

On July ~~25, 2022,~~7, 2023 the Company entered into a ~~stock purchase agreement~~sixth amendment to ~~acquire substantially all of~~ the ~~shares of a center-of-the-plate distributor in Florida. The purchase price was $10,000 paid in cash at closing and is subject~~ABL Credit Agreement which increased the aggregate commitments to ~~a customary working capital true-up. The Company has not provided the preliminary purchase price allocation for this acquisition as the initial accounting is incomplete~~$300,000, up from $200,000, maturing on March 11, 2027.

1618

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to the accompanying condensed consolidated financial statements and footnotes to help provide an understanding of our financial condition, changes in our financial condition and results of operations. The following discussion should be read in conjunction with information included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2022.~~28, 2023. Unless otherwise indicated, the terms “Company”, “Chefs’ Warehouse”, “we”, “us” and “our” refer to The Chefs’ Warehouse, Inc. and its subsidiaries.

Business Overview

We are a premier distributor of specialty foods in ~~nine of~~ the leading culinary markets in the United ~~States.~~States and the Middle East. We offer more than ~~50,000~~55,000 stock-keeping units (“SKUs”), ranging from high-quality specialty foods and ingredients to basic ingredients and staples and center-of-the-plate proteins. We serve more than ~~35,000~~40,000 customer locations, primarily located in our ~~nineteen~~23 geographic markets across the United States, Middle East and Canada, and the majority of our customers are independent restaurants and fine dining establishments. We also sell certain of our products directly to consumers through our Allen Brothers and “Shop Like a Chef” retail channels.

~~Effect of the COVID-19 Pandemic on our Business and Operations~~

The COVID-19 pandemic (“Pandemic”) has had an adverse impact on numerous aspects of our business and those of our customers including, but not limited to, demand for our products, cost inflation and labor shortages. Despite these challenges, we’ve continued to provide our core customers with high touch service, executed on our cost control measures and have returned to profitability since the second quarter of fiscal 2021. We continue to experience sequential improvement in our business which has contributed to organic sales growth of $152.3 million compared to the prior year quarter.

The extent to which the Pandemic will impact our financial condition or results of operations is uncertain and will depend on future developments including new information that may emerge on the severity or transmissibility of the disease, new variants, government responses, trends in infection rates, development and distribution of effective medical treatments and vaccines, and future consumer spending behavior, among others.

Recent Acquisitions

~~During the second quarter of fiscal 2022,~~On May 1, 2023, the Company ~~completed two acquisitions for an aggregate~~entered into a stock purchase agreement to acquire substantially all of the equity interests of Oakville Produce Partners, LLC (“GreenLeaf”), a leading produce and specialty food distributor in Northern California. The final purchase price was $86.1 million consisting of ~~approximately $22.5~~$72.2 million paid in cash ~~subject to customary~~at closing, $1.5 million paid upon settlement of a net working capital ~~adjustments. The Company will also pay additional contingent consideration, if earned, in~~true-up, the ~~form~~issuance of ~~earn-out amounts which could total $2~~a $10.0 million inunsecured note, and 75,008 shares of the ~~aggregate.~~Company’s common stock with an approximate value of $2.5 million.

On ~~December 28, 2021,~~March 20, 2023, pursuant to an asset purchase agreement, we acquired substantially all of the assets of ~~CGC Holdings, Inc.~~Hardie’s F&V, LLC (“~~Capital Seaboard”~~Hardie’s Fresh Foods”), a specialty ~~seafood and~~ produce distributor with operations in ~~Maryland.~~Texas. The initial purchase price was approximately ~~$31.0~~$42.1 million, consisting of ~~$28.0~~$38.0 million paid in cash at closing, ~~common stock warrants~~subject to customary working capital adjustments, and an earn-out liability valued at approximately $4.1 million as of the acquisition date. If earned, the earn-out liability could total up to $10.0 million over a two-year period.

During the twenty-six weeks ended June 30, 2023 , the Company completed three other acquisitions for an aggregate purchase price of approximately $16.9 million, consisting of $13.0 million paid in cash at closing, subject to customer working capital adjustments, earn-out liabilities valued at approximately of $1.7 million ,as of the dates of acquisition, and ~~$1.3~~$2.2 million ~~paid upon settlement~~ of ~~a net working capital true-up.~~deferred payments. If earned, the earn-out liabilities could total up to $2.6 million in the aggregate.

RESULTS OF OPERATIONS


		Thirteen Weeks Ended				Twenty-Six Weeks Ended					Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Net sales	Net sales	$	648,104	$	422,968	$	1,160,207	$	703,185	Net sales	$	881,820	$	648,104	$	1,601,465	$	1,160,207
Cost of sales	Cost of sales	492,100		327,094		886,690		548,364		Cost of sales	673,376		492,100		1,223,313		886,690
Gross profit	Gross profit	156,004		95,874		273,517		154,821		Gross profit	208,444		156,004		378,152		273,517
Selling, general and administrative expenses	Selling, general and administrative expenses	124,487		90,358		234,573		170,603		Selling, general and administrative expenses	179,042		124,487		335,179		234,573
Other operating expenses (income), net		3,883		857		5,046		(313)
Operating income (loss)		27,634		4,659		33,898		(15,469)
Other operating expenses, net										Other operating expenses, net	4,062		3,883		5,734		5,046
Operating income										Operating income	25,340		27,634		37,239		33,898

Interest expense	Interest expense	4,465		4,408		8,830		9,171		Interest expense	12,006		4,465		22,012		8,830
Income (loss) before income taxes		23,169		251		25,068		(24,640)
Provision for income tax expense (benefit)		6,254		(847)		6,768		(7,817)
Net income (loss)		$	16,915	$	1,098	$	18,300	$	(16,823)
Income before income taxes										Income before income taxes	13,334		23,169		15,227		25,068
Provision for income tax expense										Provision for income tax expense	3,467		6,254		3,959		6,768
Net income										Net income	$	9,867	$	16,915	$	11,268	$	18,300

Management evaluates the results of operations and cash flows using a variety of key performance indicators, including net sales compared to prior periods and internal forecasts, costs of our products and results of our cost-control initiatives, and use of operating cash. These indicators are discussed throughout the “Results of Operations” and “Liquidity and Capital Resources” sections of this MD&A.

Thirteen Weeks Ended June ~~24, 2022~~30, 2023 Compared to Thirteen Weeks Ended June ~~25, 2021~~24, 2022

Net Sales

2022 2021 $ Change % Change
Net sales $ 648,104 $ 422,968 $ 225,136 53.2 %


	2023		2022		$ Change		% Change
Net sales	$	881,820	$	648,104	$	233,716	36.1	%

Organic growth contributed ~~$152.3~~$52.6 million, or ~~36.0%~~8.1%, to sales growth and the remaining sales growth of ~~$72.9~~$181.1 million, or ~~17.2%~~28.0%, resulted from acquisitions. Organic case count increased approximately ~~34.8%~~10.0% in our specialty category. In addition, specialty unique customers and placements increased ~~35.9%~~8.7% and ~~54.6%~~11.9%, respectively, compared to the prior year period. Organic pounds sold in our center-of-the-plate category increased ~~14.2%~~5.9% compared to the prior year. Estimated inflation was ~~16.4%~~5.7% in our specialty category and ~~10.9%~~1.1% in our center-of-the-plate category compared to the prior year period.

Gross Profit


		2022			2021			$ Change		% Change			2023			2022			$ Change		% Change
Gross profit	Gross profit	$	156,004		$	95,874		$	60,130	62.7	%	Gross profit	$	208,444		$	156,004		$	52,440	33.6	%
Gross profit margin	Gross profit margin	24.1		%	22.7		%					Gross profit margin	23.6		%	24.1		%

Gross profit dollars increased primarily as a result of increased sales and price inflation. Gross profit margin ~~increased~~decreased approximately ~~140~~43 basis points. Gross profit margins decreased 70 basis points in the Company’s specialty category and ~~increased 230~~decreased 174 basis points in the Company’s center-of-the-plate category. Estimated inflation was 5.7% in the Company’s specialty category and 1.1% in the center-of-the-plate category compared to the prior year period. Gross profit margins decreased primarily due to product mix changes versus prior year, including the growth in hospitality related product sales and lower gross profit dollars per unit in certain protein categories due to price change volatility during the latter part of the second quarter of 2023.

Selling, General and Administrative Expenses


		2022			2021			$ Change		% Change			2023			2022			$ Change		% Change
Selling, general and administrative expenses	Selling, general and administrative expenses	$	124,487		$	90,358		$	34,129	37.8	%	Selling, general and administrative expenses	$	179,042		$	124,487		$	54,555	43.8	%
Percentage of net sales	Percentage of net sales	19.2		%	21.4		%					Percentage of net sales	20.3		%	19.2		%

The increase in selling, general and administrative expenses was primarily due to higher depreciation and amortization driven primarily by acquisitions and higher costs associated with compensation and benefits, facilities costs, and distribution costs to

support sales growth. Our ratio of selling, general and administrative expenses to net sales ~~decreased predominately~~increased 110 basis points due to ~~sales growth which contributed to improved fixed cost leverage~~increased near-term costs associated with our investments in ~~the quarter.~~

facilities and acquisitions.

Other Operating Expenses, Net

2022 2021 $ Change % Change
Other operating expenses, net $ 3,883 $ 857 $ 3,026 353.1 %


	2023		2022		$ Change		% Change
Other operating expenses, net	$	4,062	$	3,883	$	179	4.6	%

~~The increase in net other~~Other operating ~~expenses was~~expense increased by approximately $0.2 million primarily due to an impairment on customer relationship intangible assets of $1.8 million related to the loss of a significant Hardie’s Fresh Foods customer post acquisition and a $1.0 million increase in third-party deal costs incurred in connection with business acquisitions and financing arrangements, partially offset by non-cash charges of ~~$3.3~~$0.7 million for changes in the fair value of our contingent earn-out liabilities compared to non-cash ~~credits~~charges of ~~$0.1~~$3.3 million in the prior year period. The prior year period also includes a $0.6 million impairment of Cambridge trademarks as a result of a shift in brand strategy to leverage our Allen Brothers brand in our New England region during the second quarter of fiscal 2021.year.

Interest Expense

2022 2021 $ Change % Change
Interest expense $ 4,465 $ 4,408 $ 57 1.3 %


	2023		2022		$ Change		% Change
Interest expense	$	12,006	$	4,465	$	7,541	168.9	%

Interest expense ~~was relatively unchanged compared~~increased primarily driven by higher principal amounts of outstanding debt due to our 2028 convertible notes issued on December 13, 2022, our term loan refinancing on August 23, 2022, an increase in amounts drawn on our asset-based loan facility and higher rates of interest charged on the ~~prior year period.~~variable rate portion of our outstanding debt.

Provision for Income Taxes


		2022			2021			$ Change		% Change			2023			2022			$ Change		% Change
Provision for income tax expense (benefit)		$	6,254		$	(847)		$	7,101	(838.4)	%
Provision for income tax expense												Provision for income tax expense	$	3,467		$	6,254		$	(2,787)	(44.6)	%
Effective tax rate	Effective tax rate	27.0		%	(337.5)		%					Effective tax rate	26.0		%	27.0		%

The ~~negative~~lower effective tax rate infor the ~~prior year period~~thirteen weeks ended June 30, 2023 was primarily driven by a ~~$1.5 million discrete permanent difference related~~greater mix of foreign earnings that are subject to ~~stock compensation expense.~~tax rates below the US statutory rate of 21%.

Twenty-Six Weeks Ended June ~~24, 2022~~30, 2023 Compared to Twenty-Six Weeks Ended June ~~25, 2021~~24, 2022

Net Sales

2022 2021 $ Change % Change
Net sales $ 1,160,207 $ 703,185 $ 457,022 65.0 %


	2023		2022		$ Change		% Change
Net sales	$	1,601,465	$	1,160,207	$	441,258	38.0	%

Organic growth contributed ~~$328.5~~$140.5 million, or ~~46.7%~~12.1%, to sales growth and the remaining sales growth of ~~$128.5~~$300.8 million, or ~~18.3%~~25.9%, resulted from acquisitions. Organic case count increased approximately ~~40.0%~~33.2% in our specialty category. In addition, specialty unique customers and placements increased ~~33.0%~~14.3% and ~~49.1%~~14.3%, respectively, compared to the prior year period. Organic pounds sold in our center-of-the-plate category increased ~~19.3%~~9.8% compared to the prior year. Estimated inflation was ~~15.8%~~5.6% in our specialty category and ~~17.8%~~2.1% in our center-of-the-plate category compared to the prior year period.

Gross Profit


		2022		2021		$ Change	% Change			2023		2022		$ Change	% Change
Gross profit	Gross profit	273,517		154,821		118,696	76.7	%	Gross profit	378,152		273,517		104,635	38.3	%
Gross profit margin	Gross profit margin	23.6	%	22.0	%				Gross profit margin	23.6	%	23.6	%

Gross profit dollars increased primarily as a result of sales growth and price inflation. Gross profit margin increased approximately ~~156~~4 basis points. Gross profit margins ~~increased 42~~decreased 12 basis points in the Company’s specialty category and ~~increased 175~~decreased 126 basis points in the Company’s center-of-the-plate category. Estimated inflation was 5.6% in our specialty category and 2.1% in our center-of-the-plate category compared to the prior year period. Our gross margins were relatively consistent with the prior year period with the specialty category profitability offsetting some margin compression in our center-of-the-plate category.

Selling, General and Administrative Expenses


		2022		2021		$ Change	% Change			2023		2022		$ Change	% Change
Selling, general and administrative expenses	Selling, general and administrative expenses	234,573		170,603		63,970	37.5	%	Selling, general and administrative expenses	335,179		234,573		100,606	42.9	%
Percentage of net sales	Percentage of net sales	20.2	%	24.3	%				Percentage of net sales	20.9	%	20.2	%

The increase in selling, general and administrative expenses was primarily due to higher depreciation and amortization and higher costs associated with compensation and benefits, facilities costs, and fuel costs to support sales growth. Our ratio of selling, general and administrative expenses to net sales ~~decreased predominately~~increased by 70 due to ~~sales growth which contributing to improved fixed cost leverage~~increased near-term costs associated with our investments in ~~the quarter..~~facilities and acquisitions.

Other Operating Expenses, ~~(Income ),~~ Net

2022 2021 $ Change % Change
Other operating expenses (income), net 5,046 (313) 5,359 (1,712.1) %


	2023	2022	$ Change	% Change
Other operating expenses, net	5,734	5,046	688	13.6	%

The increase in net other operating expense relates primarily to an impairment on customer relationship intangible assets of $1.8 million related to the loss of a significant Hardie’s Fresh Foods customer post acquisition and a $1.4 million increase in third-party deal costs incurred in connection with business acquisitions and financing arrangements, partially offset by non-cash charges of ~~$3.6~~$1.1 million for changes in the fair value of our contingent earn-out liabilities in the ~~fiscal 2022~~current period compared to non-cash credits of ~~$(1.4)~~$3.6 million in the prior year period. The prior year period also includes a $0.6 million impairment of Cambridge trademarks as a result of a shift in brand strategy to leverage our Allen Brothers brand in our New England region during the second quarter of fiscal 2021.

Interest Expense

2022 2021 $ Change % Change
Interest expense 8,830 9,171 (341) (3.7) %


	2023	2022	$ Change	% Change
Interest expense	22,012	8,830	13,182	149.3	%

Interest expense ~~decreased~~increased primarily driven by higher principal amounts of outstanding debt due to ~~lower effective~~our 2028 convertible notes issued on December 13, 2022, our term loan refinancing on August 23, 2022, an increase in amounts drawn on our asset-based loan facility and higher rates of interest ~~rates~~ charged on the variable rate portion of our outstanding ~~debt as a result of the $50.0 million aggregate principal amount of Convertible Senior Notes issued on March 1, 2021 which were used to repay higher interest rate~~ debt.

Provision for Income Taxes


		2022		2021		$ Change	% Change			2023		2022		$ Change	% Change
Provision for income tax expense (benefit)		6,768		(7,817)		14,585	(186.6)	%
Provision for income tax expense									Provision for income tax expense	3,959		6,768		(2,809)	(41.5)	%
Effective tax rate	Effective tax rate	27.0	%	31.7	%				Effective tax rate	26.0	%	27.0	%

The ~~higher~~lower effective tax rate infor the ~~prior period includes~~twenty-six weeks ended June 30, 2023 was primarily driven by a greater mix of foreign earnings that are subject to tax rates below the ~~impact~~US statutory rate of ~~a $1.5 million discrete permanent difference related to stock compensation expense.~~21%.

LIQUIDITY AND CAPITAL RESOURCES

We finance our day-to-day operations and growth primarily with cash flows from operations, borrowings under our senior secured credit facilities and other indebtedness, operating leases, trade payables and equity financing.

Indebtedness

The following table presents selected financial information on our indebtedness (in thousands):


		June 24, 2022		December 24, 2021			June 30, 2023		December 30, 2022
Senior secured term loan	Senior secured term loan	$	167,819	$	168,675	Senior secured term loan	$	297,750	$	299,250
Total convertible debt	Total convertible debt	204,000		204,000		Total convertible debt	327,184		333,184
Borrowings outstanding on asset-based loan facility	Borrowings outstanding on asset-based loan facility	20,000		20,000		Borrowings outstanding on asset-based loan facility	90,000		40,000
Finance leases and other financing obligations	Finance leases and other financing obligations	10,201		11,602		Finance leases and other financing obligations	24,528		13,548
Total	Total	$	402,020	$	404,277	Total	$	739,462	$	685,982

As of June ~~24, 2022,~~30, 2023, we have various floating- and fixed-rate debt instruments with varying maturities for an aggregate principal amount of ~~$391.8~~$714.9 million.

In connection with the GreenLeaf acquisition, we issued a $10.0 million unsecured note which bears interest of 4.47%. The principal on the unsecured note is due in two equal installments on April 30, 2024 and 2025. Our convertible unsecured note matured on June 29, 2023 and was repaid in full, including all accrued interest, for $4,049 in cash.

On ~~March 11, 2022,~~July 7, 2023 we entered into a ~~third~~sixth amendment to ~~our asset-based loan facility~~the ABL ~~Facility~~Credit Agreement which increased the aggregate commitments to $300.0 million, up from ~~$150.0~~$200.0 million, ~~to $200.0 million. See Note 9 “Debt Obligations” to our consolidated financial statements for a full description.~~

maturing on March 11, 2027.

Liquidity

The following table presents selected financial information on liquidity (in thousands):


		June 24, 2022		December 24, 2021			June 30, 2023		December 30, 2022
Cash and cash equivalents	Cash and cash equivalents	$	51,806	$	115,155	Cash and cash equivalents	$	59,592	$	158,800
Working capital, excluding cash and cash equivalents	Working capital, excluding cash and cash equivalents	195,217		157,787		Working capital, excluding cash and cash equivalents	320,594		278,315
Availability under asset-based loan facility	Availability under asset-based loan facility	159,460		109,459		Availability under asset-based loan facility	85,830		135,827
Total	Total	$	406,483	$	382,401	Total	$	466,016	$	572,942

We expect our capital expenditures, excluding cash paid for acquisitions, for fiscal ~~2022~~2023 will be approximately ~~$36.0~~$50.0 million to ~~$45.0~~$60.0 million. We believe our existing balances of cash and cash equivalents, working capital and the availability under our asset-based loan facility, are sufficient to satisfy our working capital needs, capital expenditures, debt service and other liquidity requirements associated with our current operations over the next 12 months.

Cash Flows

The following table presents selected financial information on cash flows (in thousands):


		Twenty-Six Weeks Ended					Twenty-Six Weeks Ended
		June 24, 2022		June 25, 2021			June 30, 2023		June 24, 2022
Net income (loss)		$	18,300	$	(16,823)
Net income						Net income	$	11,268	$	18,300
Non-cash charges	Non-cash charges	$	37,107	$	16,748	Non-cash charges	$	47,597	$	37,107
Changes in working capital	Changes in working capital	$	(35,626)	$	(23,847)	Changes in working capital	$	(48,082)	$	(35,626)
Net cash provided by (used in) operating activities		$	19,781	$	(23,922)
Net cash provided by operating activities						Net cash provided by operating activities	$	10,783	$	19,781
Net cash used in investing activities	Net cash used in investing activities	$	(75,497)	$	(16,739)	Net cash used in investing activities	$	(142,735)	$	(75,497)
Net cash used in financing activities		$	(7,733)	$	(5,642)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	$	32,995	$	(7,733)

Net cash provided by operations was $10.8 million for the twenty-six weeks ended June 30, 2023 compared to net cash provided by operating activities of $19.8 million for the twenty-six weeks ended June 24, ~~2022 consisting of a net income of $18.3 million and $37.1 million of non-cash charges, partially offset~~2022. The decrease in cash provided by ~~investments in~~operating activities was primarily due to the working capital growth of ~~$35.6 million. Non-cash charges increased $20.4~~$12.5 million ~~primarily due~~versus the prior year period which was driven by a strategic decision to ~~a $12.8 million change in deferred tax expenses and a $5.0 million~~

pull forward inventory purchases of certain product categories during the first half of fiscal 2023. We expect our inventory levels to normalize during the remainder of the year. The increase in ~~changes in the fair value of earn-out liabilities. The~~ cash used for working capital growth was partially offset by increased net income, net of ~~$11.8~~non-cash charges, in the current year of $58.9 million ~~is primarily driven by~~compared to $55.4 million in the ~~Company’s reinvestment in working capital to support sales growth.~~prior year period.

Net cash used in investing activities was ~~$75.5~~$142.7 million for the twenty-six weeks ended June ~~24, 2022,~~30, 2023, driven ~~by capital expenditures of $23.5 million which includes the purchase of our distribution facility in Columbus, Ohio and $52.0~~$119.6 million in cash paid for ~~acquisitions.~~acquisitions and capital expenditures of $23.2 million.

Net cash ~~used in~~provided by financing activities was ~~$7.7~~$33.0 million for the twenty-six weeks ended June ~~24, 2022~~30, 2023 driven by ~~$2.8~~$50.0 million of net borrowings on our ABL facility and other revolving credit facilities, partially offset by $11.7 million of payments ~~made on senior term loans~~of debt and other financing obligations, including finance ~~lease obligations, $2.6~~leases, $3.2 million of earn-out payments classified as financing activities and $2.1 million paid for shares surrendered to pay tax withholding related to the vesting of equity incentive plan ~~awards and $2.0 million of earn-out liability payments classified as financing activities.~~awards.

Seasonality

Excluding our direct-to-consumer business, we generally do not experience any material seasonality. However, our sales and operating results may vary from quarter to quarter due to factors such as changes in our operating expenses, management’s ability to execute our operating and growth strategies, personnel changes, demand for our products, supply shortages, weather patterns and general economic conditions.

Our direct-to-consumer business is subject to seasonal fluctuations, with direct-to-consumer center-of-the-plate protein sales typically higher during the holiday season in our fourth quarter; accordingly, a disproportionate amount of operating cash flows from this portion of our business is generated by our direct-to-consumer business in the fourth quarter of our fiscal year. Despite a significant portion of these sales occurring in the fourth quarter, there are operating expenses, principally advertising and promotional expenses, throughout the year.

The Pandemic has had a material impact on our business and operations and those of our customers. Our net sales were most significantly impacted during the second quarter of fiscal 2020 when, in an effort to limit the spread of the virus, federal, state and local governments began implementing various restrictions that resulted in the closure of non-essential businesses in many of the markets we serve, which forced our customers in those markets to either transition their establishments to take-out service, delivery service or temporarily cease operations.

Inflation

Our profitability is dependent on, among other things, our ability to anticipate and react to changes in the costs of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our customers. The impact of inflation and deflation on food, labor, energy and occupancy costs can significantly affect the profitability of our operations.

~~Off-Balance Sheet Arrangements~~

~~As of June 24, 2022, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

Critical Accounting Policies and Estimates

The preparation of the Company’s condensed consolidated financial statements requires it to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies and estimates as those that are both most important to the portrayal of the Company’s financial condition and results and require its most difficult, complex or subjective judgments or estimates. Based on this definition, we believe our critical accounting policies and estimates include the following: (i) determining our allowance for doubtful accounts, (ii) inventory valuation, with regard to determining inventory balance adjustments for excess and obsolete inventory, (iii) business combinations, (iv) valuing goodwill and intangible assets, (v) self-insurance reserves, (vi) accounting for income taxes and (vii) contingent earn-out liabilities. Our critical accounting policies and estimates are described in the Form 10-K filed with the SEC on February ~~22, 2022.~~28, 2023.

2224

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to interest rate market risk relates primarily to our long-term debt. As of June ~~24, 2022,~~30, 2023, we had an aggregate ~~$187.8 million of~~ indebtedness outstanding ~~under the Term Loan and ABL Facility~~of $387.8 million that bore interest at variable rates. A 100 basis point increase in market interest rates would decrease our after tax earnings by approximately ~~$1.4~~$2.9 million per annum, holding other variables constant.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June ~~24, 2022.~~30, 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our internal ~~control~~controls over financial reporting that occurred during the quarter ended June ~~24, 2022~~30, 2023 that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is currently integrating CME and fiscal 2023 acquisitions into its overall system of internal control over financial reporting and, if necessary, will make appropriate changes as it integrates CME and fiscal 2023 acquisitions into the Company's overall internal control over financial reporting process.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in legal proceedings, claims and litigation arising out of the ordinary conduct of our business. Although we cannot assure the outcome, management presently believes that the result of such legal proceedings, either individually or in the aggregate, will not have a material adverse effect on our condensed consolidated financial statements, and no material amounts have been accrued in our condensed consolidated financial statements with respect to these matters.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors as previously disclosed in Part I, Item 1A. included in our Annual Report on Form 10-K for the year ended December ~~24, 2021~~30, 2022 filed with the SEC on February ~~22, 2022.~~28, 2023. In addition to the information contained herein, you should consider the risk factors disclosed in our Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Total Number
of Shares
Repurchased(1)
Average
Price
Paid Per Share Total
Number of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs Maximum
Number (or
Approximate
Dollar Value) of
Shares That May
Yet Be Purchased
Under the Plans
or Programs
March 26, 2021 to April 22, 2022 4,877 $ 33.14 — —
April 23, 2022 to May 20, 2022 3,941 36.97 — —
May 21, 2022 to June 24, 2022 6,319 33.24 — —
Total 15,137 $ 34.18 — —


	Total Number of Shares Repurchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
April 1, 2023 to April 28, 2023	1,914	$	34.05	—	—
April 29, 2023 to May 26, 2023	4,635	33.78		—	—
May 27, 2023 to June 30, 2023	442	33.71		—	—
Total	6,991	$	33.85	—	—

(1)During the twenty-six weeks ended June ~~24, 2022,~~30, 2023, we withheld ~~15,137~~6,991 shares of our common stock to satisfy tax withholding requirements related to restricted shares of our common stock awarded to our officers and key employees

resulting from either elections under 83(b) of the Internal Revenue Code of 1986, as amended, or upon vesting of such awards.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~During the quarterly period covered by this report, our directors and officers (as defined in Rule 16a-1(f) of the Securities Exchange Act, of 1934, as amended) adopted, terminated or modified the following Rule 10b5-1 or or non-Rule

10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K):

Name

Title

Type of Trading Arrangement

Security

Action

Date of Action

Duration of Trading Arrangement

Aggregate Number of Securities Covered

Tim McCauley

Chief Accounting Officer

Rule 10b-5 Plan to Sell

Common Stock

Adoption

June 5, 2023

Up to October 2, 2025

18,000

Each trading arrangement reported above is subject to a number of conditions, including as to the price at which, and

the timing of when,purchases and/or sales may occur, and it is possible that any trading arrangement may not result in the purchase and/or sale of any or all of the aggregate number of securities covered by such trading arrangement during the term of the trading arrangement. Additionally, these trading arrangements are subject to modification or termination in accordance with applicable law.

ITEM 7. EXHIBITS


Exhibit No.						Description











31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

10.1†						Amendment No. 6, dated as of July 7, 2023, to the ABL Facility.

101.INS						XBRL Instance Document – the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.



			†			Filed herewith

2527

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on ~~July 27, 2022.~~August 2, 2023.


									THE CHEFS’ WAREHOUSE, INC.
									(Registrant)

Date: ~~July 27, 2022~~August 2, 2023									/s/ James Leddy
									James Leddy
									Chief Financial Officer
									(Principal Financial Officer)

Date: ~~July 27, 2022~~August 2, 2023									/s/ Timothy McCauley
									Timothy McCauley
									Chief Accounting Officer
									(Principal Accounting Officer)

2628


	June 24, 2022		December 24, 2021
Principal amount outstanding	$	200,000	$	200,000
Unamortized deferred financing fees and premium	(2,238)		(2,686)
Net carry value	$	197,762	$	197,314