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 30, 2023~~March 29, 2024


☐			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 31, 2023: 39,665,691~~April 29, 2024: 39,771,675

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

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

1916

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

2520

Item 4.

Controls and Procedures

2520

PART II. OTHER INFORMATION

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities ~~and~~ ,Use of Proceeds and Issuer Purchase s of Equity Securities

2521

Item 3.

Defaults Upon Senior Securities

2621

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~~relatively low margins of 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 bewhich are sensitive to inflationary and deflationary ~~pressures; because~~pressures and intense competition; the effects of rising costs for and/or decreases in supply of commodities, ingredients, packaging, other raw materials, distribution and labor; crude oil prices and their impact on distribution, packaging and energy costs; our ~~foodservice~~continued ability to promote our brand successfully, to anticipate and respond to new customer demands, and to develop new products and markets to compete effectively; our ability and the ability of our supply chain partners to continue to operate distribution ~~operations are concentrated in certain culinary markets, we are susceptible to economic~~centers and other ~~developments,~~work locations without material disruption, and to procure ingredients, packaging and other raw materials when needed despite disruptions in the supply chain or labor shortages; risks associated with the expansion of our business; our possible inability to identify new acquisitions or to integrate recent or future acquisitions, or our failure to realize anticipated revenue enhancements, cost savings or other synergies from recent or future acquisitions; other factors that affect the food industry generally, including: recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that customers could lose confidence in the safety and quality of certain food products; new information or attitudes regarding diet and health or adverse opinions about the health effects of the products we distribute; changes in disposable income levels and consumer purchasing habits; competitors’ pricing practices and promotional spending levels; fluctuations in the level of our customers’ inventories and credit and other related business risks; and the risks associated with third-party suppliers, including the risk that any failure by one or more of our third-party suppliers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain products or injure our reputation; our ability to recruit and retain senior management and a highly skilled and diverse workforce; unanticipated expenses, including, without limitation, litigation or legal settlement expenses; the cost and adequacy of our insurance policies; the impact and effects of public health crises, pandemics and epidemics, such as the outbreak of COVID-19, and the adverse ~~weather conditions, in these areas; fuel cost volatility may have a material adverse effect~~impact thereof on our business, financial condition, orand results of operations; significant governmental regulation and any potential failure to comply with such regulations; federal, state, provincial and local tax rules in the United States and the foreign countries in which we operate, including tax reform and legislation; risks relating to our substantial indebtedness; our ability to raise additional capital ~~in the future may be limited; we may be unable to~~and/or obtain debt or other financing, ~~including financing necessary to execute~~ on ~~our acquisition strategy, on favorable~~commercially reasonable terms or at all; ~~interest charged~~our ability to meet future cash requirements, including the ability to access financial markets effectively and maintain sufficient liquidity; the effects of currency movements in the jurisdictions in which we operate as compared to the U.S. dollar; the effects of international trade disputes, tariffs, quotas and other import or export restrictions on our ~~outstanding debt may be adversely affected by changes~~international procurement, sales and operations; other factors discussed elsewhere in this report, including Part I, Item 1A of this Form 10-K and in our other public filings with the method of determining the Secured Overnight Financing 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. SEC.

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 ~~28, 2023~~27, 2024 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 30, 2023		December 30, 2022
	March 29, 2024						March 29, 2024	December 29, 2023
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	59,592	$	158,800
Accounts receivable, net of allowance of $23,673 in 2023 and $20,733 in 2022		301,375		260,167
Inventories, net		291,917		245,693
Accounts receivable, net of allowances ($23,153 in 2024, $21,423 in 2023)
Inventories

Prepaid expenses and other current assets
Prepaid expenses and other current assets
Prepaid expenses and other current assets	Prepaid expenses and other current assets	60,735		56,200
Total current assets	Total current assets	713,619		720,860

Property and equipment, net
Property and equipment, net
Property and equipment, net	Property and equipment, net	205,535		185,728
Operating lease right-of-use assets	Operating lease right-of-use assets	182,215		156,629
Goodwill	Goodwill	348,951		287,120
Intangible assets, net	Intangible assets, net	195,785		155,703

Other assets
Other assets
Other assets	Other assets	4,884		3,256
Total assets	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	$	198,087	$	163,397
Accrued liabilities	Accrued liabilities	71,739		54,325
Short-term operating lease liabilities	Short-term operating lease liabilities	23,104		19,428
Accrued compensation	Accrued compensation	28,486		34,167
Current portion of long-term debt	Current portion of long-term debt	12,017		12,428
Total current liabilities	Total current liabilities	333,433		283,745
Long-term debt, net of current portion	Long-term debt, net of current portion	709,073		653,504
Operating lease liabilities	Operating lease liabilities	175,142		151,406
Deferred taxes, net	Deferred taxes, net	7,294		6,098

Other liabilities and deferred credits		3,072		13,034
Other liabilities
Other liabilities
Other liabilities
Total liabilities	Total liabilities	1,228,014		1,107,787
Commitments and contingencies	Commitments and contingencies					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 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		396		386
Preferred Stock - $0.01 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 29, 2024 and December 29, 2023, respectively
Common Stock - $0.01 par value, 100,000,000 shares authorized, 39,773,355 and 39,665,796 shares issued and outstanding at March 29, 2024 and December 29, 2023, respectively
Additional paid-in capital	Additional paid-in capital	347,861		337,947
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,911)		(2,185)
Retained earnings	Retained earnings	76,629		65,361
Treasury stock
Total stockholders’ equity	Total stockholders’ equity	422,975		401,509
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,650,989	$	1,509,296

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

THE CHEFS’ WAREHOUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

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


		Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
		Thirteen Weeks Ended
		Thirteen Weeks Ended
		Thirteen Weeks Ended
		March 29, 2024
		March 29, 2024
		March 29, 2024
Net sales
Net sales
Net sales	Net sales	$	881,820	$	648,104	$	1,601,465	$	1,160,207
Cost of sales	Cost of sales	673,376		492,100		1,223,313		886,690
Cost of sales
Cost of sales
Gross profit
Gross profit
Gross profit	Gross profit	208,444		156,004		378,152		273,517
Selling, general and administrative expenses	Selling, general and administrative expenses	179,042		124,487		335,179		234,573
Selling, general and administrative expenses
Selling, general and administrative expenses
Other operating expenses, net
Other operating expenses, net
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
Operating income
Operating income
Interest expense
Interest expense
Interest expense	Interest expense	12,006		4,465		22,012		8,830

Income before income taxes	Income before income taxes	13,334		23,169		15,227		25,068

Income before income taxes

Income before income taxes
Provision for income tax expense
Provision for income tax expense
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:
Net income
Net income
Other comprehensive (loss) income:
Other comprehensive (loss) income:
Other comprehensive (loss) income:
Foreign currency translation adjustments
Foreign currency translation adjustments
Foreign currency translation adjustments	Foreign currency translation adjustments	193		(74)		274		51
Comprehensive income	Comprehensive income	$	10,060	$	16,841	$	11,542	$	18,351
Comprehensive income
Comprehensive income
Net income per share:
Net income per share:
Net income per share:	Net income per share:
Basic	Basic	$	0.26	$	0.46	$	0.30	$	0.49
Basic
Basic
Diluted
Diluted
Diluted	Diluted	$	0.25	$	0.42	$	0.29	$	0.47
Weighted average common shares outstanding:	Weighted average common shares outstanding:
Weighted average common shares outstanding:
Weighted average common shares outstanding:
Basic
Basic
Basic	Basic	37,634,127		37,100,968		37,570,595		37,018,044
Diluted	Diluted	45,604,297		42,053,453		38,201,408		41,896,379
Diluted
Diluted

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		Common Stock			Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Total
		Shares	Amount
Balance December 30, 2022		38,599,390	$	386			$	337,947			$	(2,185)	$	65,361		$	401,509
Balance December 29, 2023
Balance December 29, 2023
Balance December 29, 2023

Net income
Net income
Net income	Net income	—	—		—				—		1,401		1,401
Stock compensation	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
Common stock repurchased

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

Common stock repurchased
Warrants exercised
Cumulative translation adjustment	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
Common stock issued under stock plans, net of shares surrendered to pay tax withholding
Balance March 29, 2024


Balance December 24, 2021		37,887,675	$	380	$	314,242	$	(2,022)	$	37,611	$	350,211
Balance December 30, 2022

Net income	Net income	—	—		—		—		1,385		1,385
Stock compensation		433,115	4		3,039		—		—		3,043

Warrants issued for acquisitions		—	—		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
Net income	Net income	—	—		—		—		16,915		16,915
Stock compensation	Stock compensation	16,131	—		2,939		—		—		2,939

Cumulative translation adjustment	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

Cumulative translation adjustment

Cumulative translation adjustment
Common stock issued under stock plans, net of shares surrendered to pay tax withholding
Balance March 31, 2023

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

June 30, 2023

June 24, 2022

Thirteen Weeks Ended

March 29, 2024

March 31, 2023

Cash flows from operating activities:

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 (used in) operating activities:

Depreciation and amortization

15,682

11,755

Amortization of intangible assets

10,456

6,819

Provision for allowance for doubtful accounts

3,311

1,817

Non-cash operating lease expense

1,812

1,076

Provision for deferred income taxes

990

5,004

Amortization of deferred financing fees

1,813

1,009

Loss on debt extinguishment

Stock compensation

10,581

5,982

Change in fair value of contingent earn-out liabilities

1,092

3,628

Intangible asset impairment

1,838

—

Loss on asset disposal

Non-cash interest and other operating activities

Changes in assets and liabilities, net of acquisitions:

Accounts receivable

(9,854)

(24,659)

Inventories

(35,450)

(30,569)

Prepaid expenses and other current assets

(2,435)

106

Accounts payable, accrued liabilities and accrued compensation

453

19,733

Other assets and liabilities

(796)

(237)

Net cash provided by operating activities

10,783

19,781

Other assets and liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Capital expenditures

(23,155)

(23,490)

Cash paid for acquisitions, net of cash acquired

(119,580)

(52,007)

Net cash used in investing activities

(142,735)

(75,497)

Net cash used in investing activities

Cash flows from financing activities:

Payment of debt, finance lease and other financing obligations

(11,680)

(2,769)

Payment of debt and other financing obligations

Payment of finance leases

Common stock repurchases

Payment of deferred financing fees

—

(406)

Surrender of shares to pay withholding taxes

(2,115)

(2,558)

Cash paid for contingent earn-out liability

(3,210)

(2,000)

Borrowings under asset-based loan facility

50,000

—

Net cash provided by (used in) financing activities

32,995

(7,733)

Net cash used in financing activities

Effect of foreign currency on cash and cash equivalents

(251)

100

Net change in cash and cash equivalents

(99,208)

(63,349)

Cash and cash equivalents-beginning of period

158,800

115,155

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.~~ subsidiaries, is a premier distributor of specialty food and center-of-the-plate products in the United States, the Middle East and Canada. The Company is focused on serving the specific needs of chefs who own and/or operate some of the nation’s leading menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolateries, cruise lines, casinos and specialty food stores.

The Company’s quarterly periods end on the thirteenth Friday of each 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 three operating segments: East, Midwest and West that aggregate into one 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 ~~30, 2022~~29, 2023 filed as part of the Company’s Annual Report on Form 10-K ~~as filed with the SEC on February 28, 2023.~~(the “2023 Form 10-K”).

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~~2023 Form 10-K, ~~as filed with the SEC on February 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 and other factors, the results of operations for the thirteen ~~and twenty-six~~ weeks ended ~~June 30, 2023~~March 29, 2024 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
		June 30, 2023				June 24, 2022				June 30, 2023				June 24, 2022
		Thirteen Weeks Ended
		Thirteen Weeks Ended
		Thirteen Weeks Ended
		March 29, 2024
		March 29, 2024
		March 29, 2024
Center-of-the-Plate	Center-of-the-Plate	$	336,459	38.2	%	$	284,286	43.9	%	$	642,764	40.1	%	$	523,062	45.1	%
Center-of-the-Plate
Center-of-the-Plate
Specialty:
Specialty:
Specialty:
Dry Goods	Dry Goods	162,653		18.4	%	91,852		14.2	%	284,168		17.7	%	160,648		13.8	%
Dry Goods
Dry Goods
Produce
Produce
Produce
Pastry
Pastry
Pastry	Pastry	122,240		13.9	%	67,408		10.4	%	211,239		13.2	%	117,803		10.2	%
Cheese and Charcuterie	Cheese and Charcuterie	75,892		8.6	%	52,778		8.1	%	130,020		8.1	%	91,166		7.9	%
Produce		65,994		7.5	%	72,889		11.2	%	127,827		8.0	%	130,043		11.2	%
Cheese and Charcuterie
Cheese and Charcuterie
Dairy and Eggs
Dairy and Eggs
Dairy and Eggs	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	37,539		4.3	%	27,842		4.3	%	64,137		4.0	%	48,867		4.2	%
Oils and Vinegars
Oils and Vinegars
Kitchen Supplies	Kitchen Supplies	20,671		2.3	%	14,314		2.2	%	35,325		2.3	%	24,932		2.1	%
Total		$	881,820	100	%	$	648,104	100	%	$	1,601,465	100	%	$	1,160,207	100	%
Kitchen Supplies
Kitchen Supplies
Total Specialty
Total Specialty
Total Specialty
Total net sales
Total net sales
Total net sales

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. Net sales by product category includes estimates of product mix for certain locations that are not yet fully integrated into the Company’s information technology systems as of the reporting date.

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 ~~$16,615~~$19,070 and ~~$9,398~~$11,674 for the thirteen weeks ended ~~June 30,~~March 29, 2024 and March 31, 2023, ~~and June 24, 2022, respectively, and $28,289 and $18,434 for the twenty-six weeks ended June 30, 2023 and June 24, 2022,~~ respectively.

~~Immaterial Correction of Prior Period Disclosures~~Share Repurchases

The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private market transactions. Shares purchased under the program are recorded at cost and held as treasury stock.

Guidance Not Yet Adopted

~~During~~Improvements to Income Tax Disclosures: In December 2023, the ~~first quarter~~Financial Accounting Standards Board (“FASB”) issued guidance designed to improve the transparency and usefulness of ~~fiscal 2023 and subsequent~~income tax disclosures. The amendments include provisions to address the ~~issuance~~consistency of the income tax rate reconciliation and requirement to disaggregate income taxes paid by jurisdiction. The guidance is effective for fiscal ~~year 2022~~years beginning after December 15, 2024. Early adoption is permitted. The Company expects to adopt this guidance when effective and is evaluating the impact of adoption on its 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.which is limited to financial statement disclosures.

Improvements to Reportable Segment Disclosures: In ~~addition,~~November 2023, the ~~debt maturity schedule previously included~~FASB issued guidance which requires entities, including those with one reportable segment, to enhance reportable segment disclosures requirements particularly with respect to significant expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. Early adoption is permitted. The Company expects to adopt this guidance when effective and is evaluating the ~~$40,000 due upon maturity~~impact 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 condensedadoption on its consolidated financial ~~statements.~~statements, which is limited to financial statement disclosures.

Note 3 – Net Income per Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share adjusts basic net income per share for all the potentially dilutive shares outstanding during the period.

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






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

Reconciliation of net income per common share:






		Thirteen Weeks Ended				Twenty-Six Weeks Ended
		June 30, 2023		June 24, 2022		June 30, 2023		June 24, 2022
Numerator:	Numerator:
Numerator:
Numerator:
Net income	Net income	$	9,867	$	16,915	$	11,268	$	18,300
Add effect of dilutive securities
Interest on convertible notes, net of tax		1,397		719		—		1,365
Net income available to common shareholders		$	11,264	$	17,634	$	11,268	$	19,665
Net income
Net income

Denominator:

Denominator:

Denominator:	Denominator:
Weighted average basic common shares outstanding	Weighted average basic common shares outstanding	37,634,127		37,100,968		37,570,595		37,018,044
Weighted average basic common shares outstanding
Weighted average basic common shares outstanding
Dilutive effect of unvested common shares
Dilutive effect of unvested common shares
Dilutive effect of unvested common shares	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	56,251		73,381		66,694		56,817
Dilutive effect of convertible notes		7,392,817		4,616,033		—		4,524,980
Dilutive effect of stock options and warrants
Dilutive effect of stock options and warrants

Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding	45,604,297		42,053,453		38,201,408		41,896,379

Weighted average diluted common shares outstanding

Weighted average diluted common shares outstanding

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

Thirteen Weeks Ended

Twenty-Six Weeks Ended

June 30, 2023

June 24, 2022

June 30, 2023

June 24, 2022

Restricted share awards (“RSAs”)

46,746

106,571

29,717

83,001

Restricted share awards (“RSAs”) and restricted stock units (“RSUs”)

Convertible notes

—

7,392,817

91,053

Convertible notes

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 $928 and $10,483 as of June 30, 2023 and December 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 predominantly 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, net on the condensed consolidated statements of operations.

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

Total

Balance December ~~30, 2022~~29, 2023

~~17,294~~9,765

~~Acquisition value~~

~~5,835~~

Cash payments

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

Changes in fair value

~~1,092~~ (613)

Balance ~~June 30, 2023~~March 29, 2024

~~19,971~~7,152

The long-term portion of contingent earn-out liabilities were $593 and $50 as of March 29, 2024 and December 29, 2023, respectively, and are reflected as other liabilities on the Company’s condensed consolidated balance sheets. The remaining short-term portion of earn-out liabilities are reflected as accrued liabilities on the Company’s condensed consolidated balance sheets.

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~~March 29, 2024 and December ~~30, 2022~~29, 2023, 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 and its unsecured note issued in connection with the acquisition of Oakville Produce Partners, LLC (“GreenLeaf”) in fiscal 2023 (“GreenLeaf ~~Note.~~Note”). The fair value of the Company’s 2028 Convertible Senior Notes was based on Level 1 inputs. In estimating the fair value of 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 30, 2023				December 30, 2022					March 29, 2024			December 29, 2023
		Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
	Fair Value Hierarchy										Fair Value Hierarchy		Carrying Value	Fair Value		Carrying Value	Fair Value
2028 Convertible Senior Notes	2028 Convertible Senior Notes	Level 1	$	287,500	$	302,338	$	287,500	$	292,531
2024 Convertible Senior Notes	2024 Convertible Senior Notes	Level 3	$	39,684	$	41,070	$	41,684	$	43,723
GreenLeaf Note	GreenLeaf Note	Level 2	$	10,000	$	9,706	$	—	$	—
Convertible Unsecured Note		Level 3	$	—	$	—	$	4,000	$	4,345

Note 5 – Acquisitions

~~GreenLeaf~~

~~On May 1, 2023,~~The Company paid approximately $315 during the Company 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 $72,157 paid in cash at closing, $1,471 paidthirteen weeks ended March 29, 2024 upon settlement of a net working capital ~~true-up, the issuance of a $10,000 unsecured note~~true-ups on prior year acquisitions, resulting in measurement period adjustments which increased goodwill by $656 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 fundedreduced prepaid expenses and other current assets 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 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. When applicable, these valuations require the use of Level 3 inputs. All goodwill for the GreenLeaf 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 GreenLeaf 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 $27,760 and $2,900, respectively, as of the acquisition date. The customer relationships and trademarks are being amortized over 10 years.$341.

~~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~~Company recognized professional fees related to acquisition activities of ~~customer relationships~~zero and ~~trademarks valued at $13,800~~$1,243 during the thirteen weeks ended March 29, 2024 and ~~$3,600,~~March 31, 2023, respectively, aspresented within otheroperating expenses, net on the condensed consolidated statements of ~~the acquisition date. The customer relationships and trademarks are being amortized over 10 years, and 5 years, respectively.~~operations.

~~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 fiscal 2023 acquisitions as follows:~~

Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30, 2023 June 30, 2023
Net sales $ 100,181 $ 120,403
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.

Unaudited 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.~~30, 2022. 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 value. ~~CME did not have a~~The pro forma ~~impact during~~information also reflects additional interest expense that would have been incurred by the ~~thirteen and twenty-six weeks ended June 30, 2023 as it~~Company to finance the acquisitions. Pro forma interest expense 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

~~The table below sets forth the total assets acquired and liabilities assumed:~~

Chef Middle East Hardie’s Fresh Foods GreenLeaf Other Acquisitions
Current assets $ 84,076 $ 27,479 $ 16,068 $ 9,783
Customer relationships 25,800 13,800 27,760 4,276
Trademarks 11,400 3,600 2,900 —
Non-compete agreements 320 — — —
Goodwill 24,548 7,990 46,055 5,891
Fixed assets 16,953 5,582 2,477 497
Other assets 859 854 104 —
Deferred tax liability (3,600) — — (241)
Right-of-use assets 5,321 13,303 2,026 3,258
Lease liabilities (5,321) (13,303) (2,026) (3,258)
Current liabilities (43,841) (17,235) (9,240) (3,336)
Other long-term liabilities — — — (19)
Total $ 116,515 $ 42,070 $ 86,124 $ 16,851

The Company recognized professional fees related to acquisition activities of $1,385 and $1,019 during the 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~~estimated based on the ~~condensed consolidated statements of operations.~~prevailing interest rates charged on the Company’s senior secured term loan during fiscal 2022.


	Thirteen Weeks Ended
		March 31, 2023
Net sales		$	803,488
Income before income taxes		$	2,131

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 ~~$10,187~~$11,256 and ~~$9,198~~$11,205 at ~~June 30, 2023~~March 29, 2024 and December ~~30, 2022,~~29, 2023, respectively.

Note 7 – Property and Equipment

Property and equipment asis net of ~~June 30, 2023~~accumulated depreciation and amortization of $146,138 and $137,008 at March 29, 2024 and December ~~30, 2022 consisted of the following:~~

Useful Lives June 30, 2023 December 30, 2022
Land Indefinite $ 5,542 $ 5,542
Buildings 20 years 40,704 39,893
Machinery and equipment 5 - 10 years 34,722 32,107
Computers, data processing and other equipment 3 - 7 years 20,326 18,475
Software 3 - 7 years 48,544 42,609
Leasehold improvements 1 - 40 years 124,386 94,245
Furniture and fixtures 7 years 3,883 3,825
Vehicles 5 - 10 years 34,810 31,462
Construction-in-process 21,987 36,583
334,904 304,741
Less: accumulated depreciation and amortization (129,369) (119,013)
Property and equipment, net $ 205,535 $ 185,728

~~Construction-in-process at June 30,~~29, 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 system. The net book value of equipment financed under finance leases at June 30, 2023 and December 30, 2022 was $12,572 and $11,579, respectively.

~~The components of depreciation and amortization expense were as follows:~~

Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022
Depreciation expense $ 7,132 $ 4,385 $ 12,674 $ 8,800
Software amortization $ 1,539 $ 1,481 $ 3,008 $ 2,955
$ 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 ~~30, 2022~~29, 2023	$	~~287,120~~356,021
Goodwill adjustments (1)	~~1,859~~656
~~Acquisitions~~	~~59,936~~
Foreign currency translation	36 (98)
Carrying amount as of ~~June 30, 2023~~March 29, 2024	$	~~348,951~~356,579

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

Other intangible assets are net of accumulated amortization of $138,831 and $132,660 as of ~~June 30, 2023~~March 29, 2024 and December ~~30, 2022 consisted of the following:~~

June 30, 2023 Weighted-Average
Remaining
Amortization Period Gross Carrying Amount Accumulated Amortization Net Amount
Customer relationships 111 months $ 249,628 $ (93,433) $ 156,195
Trademarks 148 months 57,655 (18,484) 39,171
Non-compete agreements 21 months 8,899 (8,480) 419
Total $ 316,182 $ (120,397) $ 195,785

December 30, 2022 Weighted-Average
Remaining
Amortization Period Gross Carrying Amount Accumulated Amortization Net Amount
Customer relationships 117 months $ 205,608 $ (85,447) $ 120,161
Trademarks 165 months 51,137 (16,201) 34,936
Non-compete agreements 25 months 8,899 (8,293) 606
Total $ 265,644 $ (109,941) $ 155,703

29, 2023, respectively. Amortization expense for other intangibles was ~~$5,759~~$6,171 and ~~$3,463~~$4,697 for the thirteen weeks ended ~~June 30,~~March 29, 2024 and March 31, 2023, ~~and June 24, 2022, respectively, and $10,456 and $6,819 for the twenty-six weeks ended June 30, 2023 and June 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.~~

1412

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

2023 $ 10,940
2024 21,428
2025 21,130
2026 21,017
2027 20,449
Thereafter 100,821
Total $ 195,785

Note 9 – Debt Obligations

Debt obligations as of ~~June 30, 2023~~March 29, 2024 and December ~~30, 2022~~29, 2023 consisted of the following:


		Weighted Average Effective Interest Rate at June 30, 2023		Maturity	June 30, 2023		December 30, 2022
	Weighted Average Effective Interest Rate at March 29, 2024								Weighted Average Effective Interest Rate at March 29, 2024	Maturity	March 29, 2024	December 29, 2023
Senior secured term loans	Senior secured term loans	10.61	%	August 2029	$	297,750	$	299,250
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	6.80	%	March 2027	90,000		40,000

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

Unamortized deferred costs and premium

Unamortized deferred costs and premium

Unamortized deferred costs and premium	Unamortized deferred costs and premium				(18,372)		(20,050)
Total debt obligations	Total debt obligations				721,090		665,932
Less: current installments	Less: current installments				(12,017)		(12,428)
Total debt obligations excluding current installments					$	709,073	$	653,504
Total long-term debt

Senior Secured Term Loan Credit Facility

In March 2024, the Company entered into an eleventh amendment (“Eleventh Amendment”) to its senior secured term loan agreement, which reduced the interest rate spread on its senior secured term loan B facility. As a result of this amendment, the Company incurred a loss on debt extinguishment of $50, which represents the portion of unamortized deferred financing fees attributable to the lender that exited the loan syndicate. Arrangement fees of $775 and third-party transaction costs of $91 were expensed as incurred and included in interest expense and other operating expenses, respectively,within the Company’s condensed consolidated statements of operations.

Additionally, during the thirteen weeks ended March 29, 2024, the Company made voluntary principal prepayments totaling $6,000 towards the senior secured term loan. In connection with the ~~GreenLeaf acquisition,~~prepayments, the Company ~~issued a $10,000 unsecured note bearing~~ wrote-off unamortized deferred financing fees of $239, which are included in interest of 4.47%. The principal on the unsecured note is due in two equal installments on April 30, 2024 and 2025 and is presented under the caption “Finance leases and other financing obligations” in the table above. The convertible unsecured note matured on June 29, 2023 and was repaid in full, including all accrued interest, for $4,049 in cash.

expense

~~Maturities of~~ within the Company’s ~~debt, excluding finance leases, for the remainder~~condensed consolidated statements of ~~the fiscal year ending December 29, 2023 and each of the 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

operations.

15Convertible Notes

The net ~~carry~~carrying value of the Company’s convertible senior notes as of ~~June 30, 2023~~March 29, 2024 and December ~~30, 2022~~29, 2023 was:

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


	March 29, 2024						December 29, 2023
	Principal Amount		Unamortized Deferred Costs and Premium		Net Amount		Principal Amount		Unamortized Deferred Costs and Premium		Net Amount
2028 Notes	$	287,500	$	(5,444)	$	282,056	$	287,500	$	(5,730)	$	281,770
2024 Notes	39,684		(139)		39,545		39,684		(185)		39,499
Total	$	327,184	$	(5,583)	$	321,601	$	327,184	$	(5,915)	$	321,269

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

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


	Thirteen Weeks Ended
	March 29, 2024		March 31, 2023
Coupon interest	$	1,893	$	1,899
Amortization of deferred costs and premium	333		335

Total interest	$	2,226	$	2,234

As of ~~June 30, 2023,~~March 29, 2024, the Company had reserved ~~$24,170~~$27,970 of ~~the~~its asset-based loan facility for the issuance of letters of credit and funds totaling ~~$85,830~~$162,064 were available for borrowing.

Note 10 – Stockholders’ Equity

Equity Awards

The following table reflects the activity of RSAs and RSUs during the ~~twenty-six~~thirteen weeks ended ~~June 30, 2023:~~March 29, 2024:


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

			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

Unvested at December 29, 2023

Unvested at December 30, 2022			464,972	$	31.74	335,425	$	32.25	333,114	$	30.30
Unvested at December 29, 2023

Unvested at December 29, 2023
Granted	Granted		224,634	32.71		742,744	33.17		87,942	28.84
Vested	Vested		(208,936)	31.76		—	—		—	—
Forfeited	Forfeited		(3,000)	34.48		—	—		—	—
Unvested at June 30, 2023			477,670	$	32.17	1,078,169	$	32.88	421,056	$	30.00
Unvested at March 29, 2024

The Company granted ~~1,055,320~~583,338 RSAs and RSUs to its employees and directors at a weighted average grant date fair value of ~~$32.71~~$37.97 during the ~~twenty-six~~thirteen weeks ended ~~June 30, 2023.~~March 29, 2024. These awards are a mix of time-, market- and performance-based grants that generally vest over a range of periods up to five years. The Company recognized expense totaling ~~$4,704~~$3,590 and ~~$2,939~~$4,790 on its RSAs during the thirteen weeks ended ~~June 30,~~March 29, 2024 and March 31, 2023, ~~and June 24, 2022, respectively, and $9,494 and $5,982 during the twenty-six weeks ended June 30, 2023 and June 24, 2022,~~ respectively.

At ~~June 30, 2023,~~March 29, 2024, the total unrecognized compensation cost for unvested RSAs was ~~$34,735~~$30,463 and the weighted-average remaining period was approximately ~~1.3~~2.2 years. Of this total, ~~$12,783~~$15,195 related to RSAs with time-based vesting provisions and ~~$21,952~~$15,268 related to RSAs with performance- and market-based vesting provisions. At ~~June 30, 2023,~~March 29, 2024, the weighted-average remaining period for time-based vesting and performance-based vesting RSAs were approximately ~~2.2~~2.1 years and ~~0.7~~2.2 years, respectively.

No share-based compensation expense ~~related to the Company’s RSAs or stock options~~ has been capitalized. ~~As of June 30, 2023, there were 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
Share Repurchase Program

In ~~connection with the CME acquisition,~~November 2023, the Company ~~issued stock awards to certain members of the CME management team~~

~~which were classified as liabilities. These awards vest over~~announced a ~~period of~~two-year share repurchase program in an amount up to ~~4 years. Stock-based compensation expense for~~

$100,000, targeting $25.0 million to $100.0 million of share repurchases by the end of fiscal 2025.~~these awards~~The remaining share purchase authorization was ~~$544~~$95,000 at March 29, 2024. The Company is not obligated to repurchase any specific number of shares and ~~$0 during~~may suspend or discontinue 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.~~program at any time.

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 and Chief Executive Officer, and John Pappas, the Company’s Vice Chairman and ~~one of its directors,~~Chief Operating Officer, and are deemed to be affiliates of these individuals. Expense related to this facility totaled $176 and $123 during the thirteen weeks ended ~~June 30, 2023~~March 29, 2024 and ~~June 24, 2022, and $246 during the twenty-six weeks ended June 30, 2023 and June 24, 2022.~~March 31, 2023.

Note 12 – Income Taxes

The Company’s effective tax rate was ~~26.0%~~30.0% and ~~27.0%~~26.0% for the thirteen weeks ended March 29, 2024 and ~~twenty-six weeks-ended June 30,~~March 31, 2023, ~~and June 24, 2022,~~ respectively. The higher effective tax rate for the thirteen weeks ended March 29, 2024 is primarily due by the non-deductibility of certain compensation related items.. The effective tax rate otherwise 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~~$23,301 as of ~~June 30, 2023~~March 29, 2024 which is reflected in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet.

Note 13 – Supplemental Disclosures of Cash Flow Information


	Thirteen Weeks Ended						Thirteen Weeks Ended
	March 29, 2024					March 29, 2024		March 31, 2023
Supplemental cash flow disclosures:
Cash paid for income taxes
Cash paid for income taxes
Cash paid for income taxes
Cash paid for interest, net of cash received
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from finance leases
ROU assets obtained in exchange for lease liabilities:
Operating leases
Operating leases
Operating leases
Finance leases
Non-cash investing and financing activities:

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

Common stock issued for acquisitions		$	2,496	$	—

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

Contingent earn-out liabilities for acquisitions

Contingent earn-out liabilities for acquisitions

1715

~~Note 14 – Subsequent Events~~

~~On July 7, 2023 the Company entered into a sixth amendment to the ABL Credit Agreement which increased the aggregate commitments to $300,000, up from $200,000, maturing on March 11, 2027.~~

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 for the fiscal year ended December 29, 2023 (the “2023 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) ~~on February 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 the leading culinary markets in the United States, ~~and~~ the Middle ~~East.~~East and Canada. We offer more than ~~55,000~~70,000 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 ~~40,000~~44,000 core customer locations, primarily located in our 23 geographic markets across the United States, the 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.~~channel.

~~Recent~~ Acquisitions

On May 1, 2023, the Company 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~~$88.2 million consisting of $72.2 million paid in cash at closing, ~~$1.5~~$3.5 million paid upon settlement of a net working capital true-up, the issuance of a $10.0 million unsecured note, and 75,008 shares of the Company’s common stock with an approximate value of $2.5 ~~million.~~million based on the trading price of the Company’s common stock on the date of acquisition.

On March 20, 2023, pursuant to an asset purchase agreement, we 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~~final purchase price was approximately ~~$42.1~~$41.4 million, consisting of $38.0 million paid in cash at closing, ~~subject to customary~~$0.6 million received upon settlement of a net working capital ~~adjustments,~~true-up, and an earn-out liability valued at approximately ~~$4.1~~$4.0 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 $2.2 million of deferred payments. If earned, the earn-out liabilities could total up to $2.6 million in the aggregate.

RESULTS OF OPERATIONS


	Thirteen Weeks Ended
	March 29, 2024		March 31, 2023
Net sales	$	874,488	$	719,645
Cost of sales	665,052		549,937
Gross profit	209,436		169,708
Selling, general and administrative expenses	190,321		156,137
Other operating expenses, net	3,112		1,672
Operating income	16,003		11,899


Interest expense	13,244		10,006
Income before income taxes	2,759		1,893
Provision for income tax expense	828		492
Net income	$	1,931	$	1,401

1916

~~RESULTS OF OPERATIONS~~

Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022
Net sales $ 881,820 $ 648,104 $ 1,601,465 $ 1,160,207
Cost of sales 673,376 492,100 1,223,313 886,690
Gross profit 208,444 156,004 378,152 273,517
Selling, general and administrative expenses 179,042 124,487 335,179 234,573
Other operating expenses, net 4,062 3,883 5,734 5,046
Operating income 25,340 27,634 37,239 33,898
Interest expense 12,006 4,465 22,012 8,830
Income before income taxes 13,334 23,169 15,227 25,068
Provision for income tax expense 3,467 6,254 3,959 6,768
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 30, 2023~~March 29, 2024 Compared to Thirteen Weeks Ended ~~June 24, 2022~~March 31, 2023

Net Sales

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


	2024		2023		$ Change		% Change
Net sales	$	874,488	$	719,645	$	154,843	21.5	%

Organic growth contributed ~~$52.6~~$63.3 million, or ~~8.1%~~8.8%, to sales growth and the remaining sales growth of ~~$181.1~~$91.5 million, or ~~28.0%~~12.7%, resulted from acquisitions. Organic case count increased approximately ~~10.0%~~4.6% in our specialty category. In addition, specialty unique customers and placements increased ~~8.7%~~10.1% and ~~11.9%~~12.0%, respectively, compared to the prior year period. Organic pounds sold in our center-of-the-plate category increased ~~5.9%~~6.2% compared to the prior year. Estimated inflation was ~~5.7%~~1.2% in our specialty category and ~~1.1%~~4.6% in our center-of-the-plate category compared to the prior year period.

Gross Profit


		2023			2022			$ Change		% Change
	2024															2024				2023				$ Change			% Change
Gross profit	Gross profit	$	208,444		$	156,004		$	52,440	33.6	%	Gross profit	$	209,436	$		$	169,708	$		$	39,728	23.4		23.4	%
Gross profit margin	Gross profit margin	23.6		%	24.1		%

Gross profit dollars increased primarily as a result of increased sales and price inflation. Gross profit margin ~~decreased~~increased approximately 4337 basis points. Gross profit margins decreased 704 basis points in the Company’s specialty category and ~~decreased 174~~increased 18 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


		2023			2022			$ Change		% Change
	2024															2024				2023				$ Change			% Change
Selling, general and administrative expenses	Selling, general and administrative expenses	$	179,042		$	124,487		$	54,555	43.8	%	Selling, general and administrative expenses	$	190,321	$		$	156,137	$		$	34,184	21.9		21.9	%
Percentage of net sales	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 facility investments, 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 increased ~~110~~10 basis points due to increased near-term costs associated with our investments in facilities and acquisitions.

Other Operating Expenses, Net

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


	2024		2023		$ Change		% Change
Other operating expenses, net	$	3,112	$	1,672	$	1,440	86.1	%

Other operating ~~expense~~expenses increased by ~~approximately $0.2~~$1.4 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 connectioncharges associated with ~~business acquisitions and financing arrangements, partially offset by non-cash charges of $0.7 million for changes~~employee severance in the ~~fair value~~first quarter of ~~our contingent earn-out liabilities compared to non-cash charges of $3.3 million in the prior year.~~2024.

Interest Expense

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


	2024		2023		$ Change		% Change
Interest expense	$	13,244	$	10,006	$	3,238	32.4	%

Interest expense 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 variable rate portion of our outstanding debt.

Provision for Income ~~Taxes~~Tax Expense


		2023			2022			$ Change		% Change
	2024															2024				2023				$ Change			% Change
Provision for income tax expense	Provision for income tax expense	$	3,467		$	6,254		$	(2,787)	(44.6)	%	Provision for income tax expense	$	828	$		$	492	$		$	336	68.3		68.3	%
Effective tax rate	Effective tax rate	26.0		%	27.0		%

The ~~lower~~higher effective tax rate for the thirteen weeks ended ~~June 30, 2023~~March 29, 2024 was primarily driven by ~~a greater mix~~the non-deductibility of ~~foreign earnings that are subject to tax rates below the US statutory rate of 21%.~~certain compensation related items.

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

~~Net Sales~~

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

Organic growth contributed $140.5 million, or 12.1%, to sales growth and the remaining sales growth of $300.8 million, or 25.9%, resulted from acquisitions. Organic case count increased approximately 33.2% in our specialty category. In addition, specialty unique customers and placements increased 14.3% and 14.3%, respectively, compared to the prior year period. Organic pounds sold in our center-of-the-plate category increased 9.8% compared to the prior year. 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.

~~Gross Profit~~

2023 2022 $ Change % Change
Gross profit 378,152 273,517 104,635 38.3 %
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 4 basis points. Gross profit margins decreased 12 basis points in the Company’s specialty category and 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~~

2023 2022 $ Change % Change
Selling, general and administrative expenses 335,179 234,573 100,606 42.9 %
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 increased by 70 due to increased near-term costs associated with our investments in facilities and acquisitions.

~~Other Operating Expenses, Net~~

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 $1.1 million for changes in the fair value of our contingent earn-out liabilities in the current period compared to non-cash credits of $3.6 million in the prior year period.

~~Interest Expense~~

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

Interest expense 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 variable rate portion of our outstanding debt.

~~Provision for Income Taxes~~

2023 2022 $ Change % Change
Provision for income tax expense 3,959 6,768 (2,809) (41.5) %
Effective tax rate 26.0 % 27.0 %

~~The lower effective tax rate for the 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%.~~

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):

March 29, 2024

Senior secured term loan

Total convertible debt

Borrowings outstanding on asset-based loan facility

Finance leases and other financing obligations

June 30, 2023

December 30, 2022

Senior secured term loan

297,750

299,250

Total convertible debt

327,184

333,184

Borrowings outstanding on asset-based loan facility

90,000

40,000

Finance leases and other financing obligations

24,528

13,548

Total

739,462

685,982

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

In ~~connection with~~March 2024, we amended our senior secured term loan agreement, which reduced the ~~GreenLeaf acquisition,~~interest rate spread by 75 basis points on our senior secured term loan B facility. Additionally, during the thirteen weeks ended March 29, 2024, we ~~issued a $10.0~~made voluntary principal prepayments of $6.0 million ~~unsecured note which bears interest of 4.47%. The principal on~~towards 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.senior secured term loan.

~~On July 7,~~In November 2023, we ~~entered into~~announced a ~~sixth amendment~~two-year share repurchase program in an amount up to $100,000, targeting $25.0 million to $100.0 million of share repurchases by the ~~ABL Credit Agreement which increased~~end of fiscal 2025. During the ~~aggregate commitments~~thirteen weeks ended March 29, 2024, we repurchased 134,553 shares of our common stock at an average purchase price of $37.16 per share. The share repurchases were funded by our available cash. The remaining share purchase authorization was $95,000 at March 29, 2024. We are not obligated to ~~$300.0 million, up from $200.0 million, maturing on March 11, 2027.~~repurchase any specific number of shares and may suspend or discontinue the program at any time.

Liquidity

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


		March 29, 2024
		June 30, 2023		December 30, 2022
		March 29, 2024

		March 29, 2024
Cash and cash equivalents	Cash and cash equivalents	$	59,592	$	158,800
Working capital, excluding cash and cash equivalents		320,594		278,315
Cash and cash equivalents
Cash and cash equivalents
Working capital(1), excluding cash and cash equivalents
Working capital(1), excluding cash and cash equivalents
Working capital(1), excluding cash and cash equivalents
Availability under asset-based loan facility	Availability under asset-based loan facility	85,830		135,827
Total		$	466,016	$	572,942
Availability under asset-based loan facility
Availability under asset-based loan facility

(1) We define working capital as current assets less current liabilities.

We expect our capital expenditures, excluding cash paid for acquisitions, for fiscal ~~2023~~2024 will be approximately ~~$50.0~~$35.0 million to ~~$60.0~~$45.0 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 12twelve months.

Cash Flows

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

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


	Thirteen Weeks Ended
	March 29, 2024		March 31, 2023



Net cash provided by (used in) operating activities	$	30,900	$	(2,261)
Net cash used in investing activities	$	(17,381)	$	(59,633)
Net cash used in financing activities	$	(21,252)	$	(5,141)

Our cash provided by operating activities is predominately driven by net sales to our customers. Our cash used in operating activities is primarily driven by our payments to suppliers for our inventory, employee compensation, payments to support our facilities, our distribution network, interest on our indebtedness, payments to tax authorities and other general corporate expenditures. Net cash provided by operations was ~~$10.8~~$30.9 million for the ~~twenty-six~~thirteen weeks ended ~~June 30, 2023~~March 29, 2024 compared to ~~net~~ cash ~~provided by~~used in operating activities of ~~$19.8~~$2.3 million for the ~~twenty-six~~thirteen weeks ended ~~June 24, 2022.~~March 31, 2023. The ~~decrease~~increase in cash provided by operating activities was primarily due to lower inventory purchase levels in the ~~working capital growth of $12.5 million versus~~current period as the prior year ~~period which was driven by~~results included a strategic ~~decision to~~ pull forward of 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 cash used for working capital growth was partially offset by increased net income, net of non-cash charges, in the current year of $58.9 million compared to $55.4 million in the prior year period.that did not recur.

Net cash used in investing activities was ~~$142.7~~$17.4 million for the ~~twenty-six~~thirteen weeks ended ~~June 30, 2023,~~March 29, 2024, driven ~~$119.6 million in cash paid for acquisitions and~~by capital expenditures of ~~$23.2~~$17.1 million.

Net cash ~~provided by~~used in financing activities was ~~$33.0~~$21.3 million for the ~~twenty-six~~thirteen weeks ended ~~June 30, 2023~~March 29, 2024 driven by ~~$50.0 million of net borrowings on our ABL facility and other revolving credit facilities, partially offset by $11.7~~$6.8 million of payments of debt and other financing obligations, ~~including finance leases, $3.2~~$5.0 million ~~of earn-out payments classified as financing activities and $2.1~~used to repurchase our common stock, $7.1 million paid for shares surrendered to pay tax withholding related to the vesting of equity incentive plan ~~awards.~~awards, $1.3 million of earn-out payments and $1.1 million of finance lease payments.

~~Seasonality~~Recent Accounting Pronouncements

~~Excluding our direct-to-consumer business, we generally do not experience any material seasonality. However, our sales~~Information related to new accounting guidance is included in Note 1 “Operations 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 amountBasis 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.

~~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 alongPresentation” to our ~~customers. The impact of inflation and deflation on food, labor, energy and occupancy costs can significantly affect the profitability of our operations.~~

~~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. Basedin this Quarterly Report 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 28, 2023.~~

10-Q.

2419

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 30, 2023,~~March 29, 2024, we had aggregate indebtedness outstanding of ~~$387.8~~$369.5 million that bore interest at variable rates. A 100 basis point increase in market interest rates would decrease our ~~after tax~~after-tax earnings by approximately ~~$2.9~~$2.6 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 30, 2023.~~March 29, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarter ended ~~June 30, 2023~~March 29, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is ~~currently~~actively integrating ~~CME~~the Hardie’s and ~~fiscal 2023~~GreenLeaf acquisitions into its overall system of internal control over financial reporting and, if necessary, will make appropriate changes as it integrates ~~CME~~Hardie’s and ~~fiscal 2023 acquisitions~~GreenLeaf 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 ~~30, 2022 filed with the SEC on February 28,~~29, 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 AND ISSUER PURCHASES OF EQUITY SECURITIES

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 — —
Issuer Purchases of Equity Securities


	Total Number of Shares Repurchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
December 30, 2023 to January 26, 2024	—	$	—	—	100,000
January 27, 2024 to February 23, 2024	25,301	36.51		—	100,000
February 24, 2024 to March 29, 2024	296,803	37.42		134,533	95,000
Total	322,104	$	37.34	134,533	95,000

(1)~~During the twenty-six weeks ended June 30, 2023, we withheld 6,991~~Represents withholding of 322,104 shares of our common stock during the thirteen weeks ended March 29, 2024 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.~~awards, in addition to shares purchased as part of a publicly announced program.

(2)In November 2023, we announced a two-year share repurchase program in an amount up to $100.0 million targeting $25.0 million to $100.0 million of share repurchases by the end of fiscal 2025.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

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~~Alexandros Aldous

General Counsel, Corporate Secretary & Chief ~~Accounting~~Government Relations Officer

Rule 10b-5 Plan to Sell

Common Stock

Adoption

~~June 5, 2023~~March 14, 2024

Up to ~~October 2,~~March 1, 2025

~~18,000~~25,000

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 7.6. EXHIBITS


Exhibit No.						Description











10.1						Cooperation Agreement, by and among The Chefs’ Warehouse, Inc., Legion Partners Asset Management, LLC, Legion Partners, L.P. I, Legion Partners, L.P. II, Legion Partners, LLC, Legion Partners Holdings, LLC, Christopher S. Kiper, and Raymond White, dated March 1, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 4, 2024).

10.2						Eleventh Amendment to Credit Agreement, dated June 22, 2016, by and among Dairyland USA Corporation and Chefs’ Warehouse Parent, LLC, as Borrowers, and The Chefs’ Warehouse, Inc. and the other Loan Parties party thereto, as Guarantors, the Lenders party thereto and Jefferies Finance LLC, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 18, 2024).









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~~

2722

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 ~~August 2, 2023.~~May 1, 2024.


									THE CHEFS’ WAREHOUSE, INC.
									(Registrant)

Date: ~~August 2, 2023~~May 1, 2024									/s/ James Leddy
									James Leddy
									Chief Financial Officer
									(Principal Financial Officer)

Date: ~~August 2, 2023~~May 1, 2024									/s/ Timothy McCauley
									Timothy McCauley
									Chief Accounting Officer
									(Principal Accounting Officer)

2823


	Chef Middle East		Hardie’s Fresh Foods		GreenLeaf		Other Acquisitions
Current assets	$	84,076	$	27,479	$	16,068	$	9,783
Customer relationships	25,800		13,800		27,760		4,276
Trademarks	11,400		3,600		2,900		—
Non-compete agreements	320		—		—		—
Goodwill	24,548		7,990		46,055		5,891
Fixed assets	16,953		5,582		2,477		497
Other assets	859		854		104		—
Deferred tax liability	(3,600)		—		—		(241)
Right-of-use assets	5,321		13,303		2,026		3,258

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

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

Other long-term liabilities	—		—		—		(19)


Total	$	116,515	$	42,070	$	86,124	$	16,851



	Useful Lives	June 30, 2023		December 30, 2022
Land	Indefinite	$	5,542	$	5,542
Buildings	20 years	40,704		39,893
Machinery and equipment	5 - 10 years	34,722		32,107
Computers, data processing and other equipment	3 - 7 years	20,326		18,475
Software	3 - 7 years	48,544		42,609
Leasehold improvements	1 - 40 years	124,386		94,245
Furniture and fixtures	7 years	3,883		3,825
Vehicles	5 - 10 years	34,810		31,462

Construction-in-process		21,987		36,583
		334,904		304,741
Less: accumulated depreciation and amortization		(129,369)		(119,013)
Property and equipment, net		$	205,535	$	185,728


June 30, 2023	Weighted-Average Remaining Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	111 months	$	249,628	$	(93,433)	$	156,195

Trademarks	148 months	57,655		(18,484)		39,171
Non-compete agreements	21 months	8,899		(8,480)		419
Total		$	316,182	$	(120,397)	$	195,785


2023	$	10,940
2024	21,428
2025	21,130
2026	21,017
2027	20,449
Thereafter	100,821
Total	$	195,785


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


	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