Acquisitions | Acquisitions GreenLeaf 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 $86,124 consisting of $72,157 paid in cash at closing, $1,471 paid upon settlement of a net working capital true-up, the issuance of a $10,000 unsecured note and 75,008 shares of the Company’s common stock with an approximate value of $2,496 based on the trading price of the Company’s common stock on the date of acquisition. The acquisition was partially funded by a $40,000 incremental draw on the Company’s asset-based loan facility. The Company’s purchase price allocation is preliminary and is subject to 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. Hardie’s Fresh Foods On March 20, 2023, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of Hardie’s F&V, LLC (“Hardie’s Fresh Foods”), a specialty produce distributor with operations in Texas. The initial purchase price was approximately $42,070, consisting of $38,000 paid in cash at closing, subject to customary net working capital adjustments, and an earn-out liability valued at approximately $4,070 as of the acquisition date. If earned, the earn-out liability could total up to $10,000 over a two-year period. The payment of the earn-out liability is subject to the successful achievement of certain EBITDA targets. The Company’s purchase price allocation is preliminary and is subject to revision pending the valuation of goodwill and intangible assets acquired. This valuation is incomplete as of June 30, 2023 as the Company is currently in the process of completing its assessment of valuation inputs and assumptions as well as opening working capital. When applicable, these valuations require the use of Level 3 inputs. All goodwill for the Hardie’s Fresh Foods acquisition will be amortized over 15 years for tax purposes. The goodwill recorded primarily reflects the value of acquiring an established specialty produce distributor to leverage the Company’s existing products in the markets served by Hardie’s Fresh Foods and any intangible assets that do not qualify for separate recognition, including assembled workforce. The intangible assets acquired consisted of customer relationships and trademarks valued at $13,800 and $3,600, respectively, as of the acquisition date. The customer relationships and trademarks are being amortized over 10 years, and 5 years, respectively. Other Fiscal 2023 Acquisitions During the twenty-six weeks ended June 30, 2023, the Company completed three other acquisitions for an aggregate initial purchase price of approximately $16,851, consisting of $12,971 paid in cash at closing, subject to customary working capital adjustments, earn-out liabilities valued at approximately of $1,665 as of the dates of acquisition, and $2,215 of deferred payments. If earned, these earn-out liabilities could total up to $2,562 in the aggregate. The Company’s aggregate purchase price allocation is preliminary and is subject to revision pending the valuations of goodwill and intangible assets acquired. This valuation is incomplete as of June 30, 2023 as the Company is currently in the process of completing its assessment of valuation inputs and assumptions as well as opening working capital. When applicable, these valuations require the use of Level 3 inputs. All goodwill of $5,891 will be amortized over 15 years for tax purposes. The intangible assets acquired consisted of customer relationships valued at $4,276 as of the acquisition dates. The customer relationships are being amortized over 10 years. The Company reflected net sales and income before income taxes in its condensed consolidated statement of operations related to the 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. Pro forma Financial Information The table below presents unaudited pro forma condensed consolidated income statement information of the Company as if the GreenLeaf and Hardie’s Fresh Foods acquisitions had occurred on December 25, 2021, and the CME acquisition had occurred on December 26, 2020. The pro forma results were prepared from financial information obtained from the sellers of the business, as well as information obtained during the due diligence process associated with the acquisitions. The pro forma information is not necessarily indicative of the Company’s results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of the Company’s future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, any incremental costs for transitioning to become a public company, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information reflects amortization and depreciation of the acquisitions at their respective fair value. CME did not have a pro forma impact during the thirteen and twenty-six weeks ended June 30, 2023 as it was included in the condensed consolidated results of operations for the entire period. Thirteen Weeks Ended Twenty-Six Weeks Ended June 30, 2023 June 24, 2022 June 30, 2023 June 24, 2022 Net sales $ 892,161 $ 788,182 $ 1,695,649 $ 1,435,104 Income before income taxes $ 13,617 $ 28,513 $ 16,752 $ 39,144 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 other operating expenses, net on the condensed consolidated statements of operations. |