CHEF - Earnings call transcript Q3 2024 | The Chefs' Warehouse, Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to The Chefs' Warehouse Third Quarter 2024 Earnings Conference Call.

As a reminder this conference is being recorded. I'd now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary and Chief Government Relations Officer. Please go ahead, sir.

Alexandros Aldous

Thank you, operator. Good morning, everyone. call Leddy, Pappas, our today's CEO; Chairman on Jim and CFO. me are Founder, Chris and With By now you quarter XXXX should have access press to release. earnings our third section. Throughout www.chefswarehouse.com It and non-GAAP presenting estimated both and adjusted including, and income the found EBITDA also historical measures, call, adjusted at adjusted others, share. EBITDA can Investor will net be financial Relations earnings historical estimated this among be as conference we as under per and well with GAAP used These may not measures in accordance titled measures are differently calculated financial similarly by and in calculated be companies. non-GAAP other of to GAAP press comparable non-GAAP reconciliations Quantitative in release. our financial their most today's appear measures measures directly financial

forward-looking should differ performance. therefore need risks to are we undue performance to remind results that discussion you part on everyone statements, future our Such uncertainties expect. not we subject regarding and guarantees not that of include are These our including numerous them. estimated materially our what put from forward-looking actual statements cause and remarks, Before statements reliance begin statements financial I to of will formal today could

Some SEC our in report are to Form mentioned release. and in of results detail. update our XX-Q, XX-K Form reports provide website. Today, the and annual we quarterly business on are available quarter on a discussed are on these which risks over third Others are in today's going go

that, posted few XXXX section up Chris? to only. are of the portion The Relations this the call Pappas. Then Earnings slides a open a over our will Warehouse For illustration I slides for turn on at Please to purposes website we discussion these Presentation. that morning, disclosed Quarter will the note refer Chefs' call for this Third questions. With titled Chris Investor we under time will

Christopher Pappas

trends thank you our the sequentially Business earnings XXXX call. and third and Alex, quarter. joining for quarter improve all demand through you, Thank third

quarter season softer demographic latter higher in into slightly to August. Customer activity continued and early and travel accelerated led among into a in demand increase international of July the momentum seasonal the the income and Continued half October.

and highly and points. compared with will delivering across basis dollars in domestic as third organic increased category approximately margins base, the noncore increasing of divisions specialty our the growth approximately Case XX X% than X.X%. points category entire third certain X we on basis growth XX customer a their unique in and and and points to approximately to Gross communities Slide with markets. Gross XX increased sales item year CW profit service year-over-year lower our growth unique partnership customer basis X.X% to well in prior and to the serve. Please few center-of-the-plate X.X% product growth as of for -- pounds high-quality profit our more net XXXX, few growth commitment quarter would in strong relevance margin of approximately margins partially year-over-year. by percentage the in driven in margin growth operating like continued gross presentation. quarter were attrition Jim gross detail XX.X% includes approximately with the while the sales. increased pounds which growth by Organic of provide business was moments. third up in dedication Specialty of Our year, higher Placement The impacted X.X%. suppliers year-over-year gross and quarter. and strong customers markets progress international related margin over was to refer prior center-of-the-plate the margin from Specialty A diverse profit placements. I highlights in as and the the thank team delivered organically were

opportunity this of more of quarter goals growth targeted progress certain to the commercial announced to plan our in to XXXX, and range during fourth allocation take expect achieving that the detail metrics contribute financial and operational provide year-end we we to by we on capital As wanted XXXX.

locations, teams to per both X driving we line X. margin compared Chart profit line as year EBITDA full our on work as bottom multiple X In of adjusted to third improvements addition, compared top as we improve global displays incremental firm of midpoint estimated engaged as as include year have XXXX transfer which route continue to target expense certain as and consulting key teams Slide to percentage year XXXX. Across reductions trailing a progression distribution gross in dollars adjusted annual and markets. and gross for assist the gains. Please in XXXX the XXXX, a internal guidance displays to XX-month of profit operating well our our per via initiatives, refer based our full Chart of employee as full route XXXX. consolidation current costs dollars quarter

facility. During X Northern with acquisitions recent to The and with operations In transfers continues our XXXX, processing the we and in we online. as eliminated the protein XXXX. quarter we've routes Southwest Seattle opened and operations progress the in Northwest California, California of first Arizona completion consolidation Northern we our of as distribution by expect our coming integrated specialty facility and in

here order in digital website. charts and real-time Now supporting coming continue via to our Investments platform please enhancements contribute customer-facing digital analytics drives our margin teams. Slide coming functionality which our refer the adoption to improved orders online orders growth, platforms, and X. both data sales to enhancement to team progression our display via customer include as and mobile The of

locations our XX% of of XXXX. in the XXXX end As customers and the through domestic XXXX, XX% approximately of at third quarter versus XX% specialty are online of ordering

X. to our financial you primary provides teams to the please are order on XXXX Now This if could focused in targets. X our areas slide Slide refer deliver

into provide we While call, future color to on expect of detail initiative every during not presentations. we go will do more this

our areas protein businesses of In focus. One key specialty efficiency-related we of and just a discussed, addition the to is and the Texas. highlight growth highlighted number focus produce here metrics in to ongoing integration have of

steps Texas and same our and produce EBITDA protein are operations period incrementally sales of XXX combined efficiency, to Year-to-date discuss our I'll it detailed information to across XXXX operational We points taking merge specialty cross-sell that, our and the on margin high-quality quarter products Jim the teams turn the improved improve our grow for more XXXX. With Jim? an for diverse in approximately financial our has to versus liquidity. over basis and update platform.

James Leddy

comparison Chris, and and X. Slide of liquidity. Please provide sheet now everyone. balance provide results Thank refer current on year update you, to the our and quarter morning, prior our a versus operating quarter good I'll an

impacted versus approximately Net from in $XXX.X third inflation inflation including category X.X% million estimate $XXX.X September our dairy million XX, demand quarter X%. growth in of and chocolate increased center-of-the-plate year-over-year category July, Hurricane quarter quarter. Aggregate approximately during X.X% to was of XXXX. of increases in prior Our products. net the was sales impact significant by for specialty revenue the We third our in price quarter quarter, ended the X.X% by softer certain third primarily inflation and specialty year Beryl, the XXXX, of consisting X.X% the in inflation driven that

investments pricing million for XXXX. Gross and profit the aggregate Gross in support The across of of growth XXXX third the gross to profit XXXX. million points And products, and million specialty general were net sales growth profit range. $XXX.X for for increase versus the of teams these XX.X% increased costs was sales, the to margins a basis sales, categories and third million X.X% third XXXX compensation, X% of for to percentage XX versus the expenses remaining $XXX.X quarter the increased XXXX. to dollar third increased current was expenses the and the quarter. Adjusted by quarter approximately quarter X.X% X% with distribution $XXX.X our quarter to of inflation adjusted facility product facilities operating depreciation operations increased $XXX.X higher driven prior strong to in for quarter. Selling, as third administrative delivered associated from approximately third the during primarily year of XX.X% quarter. and X.X% due operating quarter procurement expenses and Excluding amortization

was XXXX administration higher $XX.X and of quarter. versus compared prior expenses for The profit, year third partially income third operating general XXXX. to gross income million of primarily higher by operating $XX.X was quarter increase the driven in for million Our the selling, the offset quarter by

quarter. net $X.XX we for share GAAP or million diluted of income diluted net $X.XX for to income quarter EBITDA $XX.X compared $XX.X XXXX. third $XX.X per XXXX, was basis, share million of million per of $XX.X was $X.XX quarter. year $XX.X $X.X third per million the quarter million a of to quarter for the prior Our had adjusted per non-GAAP share for diluted compared the third Adjusted or third $X.XX quarter net for of On of third share diluted year XXXX prior the XXXX million for compared the income or to or third the

to X. At our update of Turning ABL $XXX.X total to and sheet the Slide availability under $XX.X balance of had $XXX.X of refer of million on quarter, million, end facility. the in liquidity we the liquidity. third and cash comprised million an our Please

equivalent achieving share quarter, to third million debt to free cash X.X $XX continue generation. year-end goals the and be of make market leverage During XXXX dependent million we repurchasing to of continue flow our outstanding on allocation of toward to $XXX and progress net will conditions repurchases price, shares. Timing capital Xx

XXX,XXX common of $XX in As we shares, of have of reduction million a approximately repaid debt. our September repurchased shares outstanding, and outstanding XX, XXXX, year-to-date, million $XX.X outstanding dollars of resulting shares

compared As year-end million, approximately X.Xx EBITDA of as Post-third and debt and all net fixed on X.Xx plus in as our XXXX. repriced was quarter the spread to a XXXX, inclusive of XX, of fixed cash of plus total SOFR $XXX XX, spread XXXX, approximately a end, SOFR million debt-to-adjusted coupon September equivalents was of net to October loan approximately reducing X.X%. term X% XXXX, we maturing $XXX from cash

for million of current million $X.XXX the Turning to open for follows. XXXX. questions. XX to our $XXX we fully year between And business, you. therefore, in XXXX notes are estimate full that sales XXXX at full maturing we full fourth $XXX to expect the point, to and $X.XX financial up to be count and the of to as million year and trends quarter dilutive billion guidance the updating be million. Please will for Gross shares year it adjusted the and billion. note, guidance quarter full and million EBITDA between will this and be periods. Thank year in reporting on in the share $XXX the XXXX, Operator? our We for the approximately full be we fourth range diluted expect $XXX profit be net Based we of year to convertible

Operator

Carden question Our comes Instructions] of first from Mark UBS. [Operator

Mark Carden

sounds the it progressed, improved whole. of emerged were quarter though, I to the summer by as So more like for some the see have More pretty any just a a challenges been at steady as like of traffic want you what of beginning if for impacted start, intense Chef bit XQ in if it softness quarters? it the to recent seeing guys the industry broadly period. sounds as trends travel pockets was speaking, additional or in

James Leddy

I We of little Thanks, Mark. of Yes. No, blip July. think kind had a a it. bit in you summarized

a of think may the industry last think out. be that's I year, a going thought back quarter this with kind year. That how of level played where then the August anomaly, July an the international pre-COVID normal you new repeated than have the kind July you That it -- into And and again that bit I travel. of of was early periods. of the have half a strength good softer

which say, really driving we quarter, the a in think think good our offset it share mentioned X% in us gross September item softness to so. into we that kind continued remarks take teams penetration profit prepared top of we really And the we're growth, on I in as dollar I the did into continue but about strong mentioned, trends So October, July. some our of to of market job building line with would cost unique

Mark Carden

picking talent hiring Or you some holding are any a salesperson environment? we're customers the any applications by at in for just seeing industry-wide guys seeing Great. seen shifts are then given Okay. this, the that just just And bit up better? just up competition And of all? any declining even if impact traffic of you top have your

Christopher Pappas

bring we it. mean, bench to looking the Yes. to I always hire. we as continue say We're in

have You have grow. that to to bench

call takes same see understand, and to high-qualified, you more team. X like residency. And underestimated how did them them, point build the the that qualified who to to especially takes It of, I I year product people. school? it's lines. I'd sales would always think sometimes really their complicated a it's relationship train us, medical manager graduate long years this doctor them use I see -- do the it I example to go with wouldn't. at just

So years job a our those on. are takes products customers people build relationships It's the relying It are to good portfolio for almost performers. that of life. and

So of jumping and we continue don't have a around hire. lot we to

Operator

of question Slagle next comes Alex Jefferies. from Our

Alexander Slagle

Congrats. could some EBITDA Texas gave much point? is I And then diluting update on provide off. early business parts has about color seen this talked just in wanted you've how work progress, some you to the on at been margin Maybe you there And Hardie's margin improvements the ask certain cross-selling. ramp business, Hardie's, the could if just of on overall integrating examples you the of as progress the you the wondering there. us paying your

James Leddy

a some couple of I underway. to that It's expect Allen gotten kind normal we that's of team Hardie's, XX market improvement making acquisitions. EBITDA and out take get a creating Chefs' that our because that looking basis it operations us pretty Texas thanks. where Alex, big to the of that we of margins specialty And overall company. It's as and to in to grow years help ramp then integrating it of protein going start. more mean, points you're of really initially. them efficient the revenue is one a we've our taken XX it's our a with further operationally. We've Hardie's a and I'll going fast. the big we Sure. And were progress. -- in you're but And and business is given Warehouse slides up, that that Texas most small some big on is I true think in of you're is CW in there when we posted integrate mentioned we but building Yes. footprint costs in business for. a Yes, to our business Brothers part team

Alexander Slagle

margin So the what's compression?

James Leddy

Yes, us we overall of the years. points we about it XX as business next by over look hasn't the back basis dilutes really that It changed. to XX to get integrate couple and

Christopher Pappas

I our system is of the like in traffic from all working. performance restaurants. we all kind taking -- over a Alex, market you're slowdown Yes. what we're investments seeing years where many share. the the It's have just you market our And the many, we've today that that's made environments -- mean, do in cross-selling built for

is year. And all So win grind the really all you in our little our thank it's people, to I and so be think warehouses. we're got a systems, just all data your you've now. reports in right from a and that grind our to to last numbers well performing and see share your taking that's only way able coming in out investments compared And the grow is it's winning. we're to market God, And the soft reason

Alexander Slagle

service looking around, think kind like maybe just and mid-single still been they're wondering it's food know level you you've levels. but customer where impressive still there, guess sure net I higher digits, I'm this better churn tracking. prices. of in are seeing tough I follow-up, about Yes, what price pick the And more curious you're a kind out that's of there? levels would saying operators for shopping And helpful. growth, up, churn

Christopher Pappas

very margin that you a competitive is been always see it's again, mean, -- our actually I our Yes. industry, but up.

have where of into model. back and We've in things have for this we're So investing. not are optimal. I been into our to the us. systems the keep stock And built We've environment investing that constantly kind going been followed people and invested

actually, customer our grow with -- a giant winning we're tailwind have don't customers. and big You

with helping it's right that just normalizing. a to But I swore customer we customer think rush is acquisition mean, the good. COVID little softness New more pretty is at headwind the of think I now us And you're level. COVID, [ that have business going that ]. still people

it used prices. Our are are going think been really the little steakhouses. $XXX has customers really super to at the get and end And when high that we maybe get back are still going well. good and it performing And customers out, a will to A better. Unfortunately, business coming you to in going softness service But costs experience. more that great head. customers go food spend the great more to the higher want better have consumers to are $XXX, great core

what think them I driving we're the able and we think Warehouse, of what So deliver sell that's and I where that's cross-selling. our Chefs' to reliability

Operator

Our next Andrew question comes CL Wolf King. from of

Andrew Paul Wolf

qualitatively, give you the better versus and Specialty could has know the been have might case I you but gave how but for sense October or growth of a the us it X.X% quarter? this, so -- Case kind of much September cadence? I missed growth

James Leddy

to cost Yes. we on best it progressed have And October that top way would September. is say trends continued I then us the a I then was and the mentioned, of through X% nicely July quarter. don't breakout I month. think that it coming really just out demand-driven. mean, primarily August frame as early by We line into month and about And

Andrew Paul Wolf

that Okay. just was better said better even yesterday all of Did by was similar because you hurricanes, was kind maybe late September. perhaps And of beginning October October of Cisco cadence? than see impacted late is a kind suggested October

James Leddy

but did hurricane a business operate a October, in amount huge don't little a us We hit portion nothing good in of bit of material. hugely in Florida. It where impact the early

in into other were commentary have the than trends September October. So of I out October don't any good coming

Andrew Paul Wolf

with between without points now Hardie's, margin charts EBITDA thank it's simple like Got a and on the it's XXXX [ the did I ], it, year guidance. to XX. about bridge expansion and and for long-term the of And basis information XX the you math it. some just

look Hardie's getting it's to there's the we play XX, adding margins getting either improvement but could better? including expansion, increasingly How tackle or bps So like you're to linearly out-years, route 'XX you facilities were you're XX to the build way, building this out? we way, are going is of digital, X increase it more this because kind Or -- margin is do suggest you we in where a if out something questions. Should would model doing productive? year a for

James Leddy

straight it predict back coming in years go Yes. a there, years this I EBITDA line. by investment deliver can of we exactly be and out. XX Nothing well, And to X were points and I'll straight XX, the of the investment that going COVID of got will to think never in off points to you then happens before. lot margin coming talked of we kind we've depend type bomb. And hit were period period on mean, similar able will a of XX a Whether X to big we're a about hit. a But that how of adjusted improvement I get or play for the off before macroeconomic it's We obviously. EBITDA of nuclear goes the year. line, kind goal improvement couple basis a basis a to XX -- environment, margin

think, So our it way either can model target. but you that's I

Andrew Paul Wolf

Okay.

So fair. that's

or or -- day-to-day on executed in meat I happen? a these like trainings this have wouldn't potato plans to big there's So like stuff on investments and there's can a route, just nothing dependent be of basis, consolidation that all are like internal of call it no lot that digital

Christopher Pappas

Yes.

capacity. all do we've think investments yet, that's lot in, already We're of not but in a We've made some setup. more I a XXX% consolidated that there There major, need markets baked added are Andy. modernized major departments.

more we're San will We get that kind in one probably lot warehouses have through where with multiple in consolidated. of, you efficiency, protein what be Francisco built going now a we multiple markets right And it. day

the -- I it the and we time. need still doing of long think a consolidating of okay? And we markets scale, the rewards efficiencies some that new over get we're the consolidating, this Now been should that many next of mean, besides little as more I you've a years

that to to continues to bit get little should environment, drive the as of overhead. of those and drive we said, that faster, that rewards volume we the You mercy up volumes. And unbelievable get And the business that as the know get less. as right volume start of phase get capacity that's overhead volume economic eat the -- But bottom more up now build, start of kind into going and of done we little more think are and slowdown, we you the like we it line. of tick A drops an more more fixed job. we're we're more the through the to faster. those think lot leverage A has is the going Jim we at the to I investments a team the good environment, you

taking look really the numbers say kind is put to putting to up it's environment all other that's companies, the grind of products bottom line. from what's you more and the share the If the sell the up, mentioned we're you driving and coming customers and you in reports at numbers same of the to investments market the some out and challenging. And more people

Operator

come Bania questions from Markets. next Capital BMO of Our Kelly

Kelly Bania

the on here it's within was give always guess drill maybe us target the financial going been but could can down on some other maybe because about behind the as up it big here margin I And more of -- opportunity color bit you goal? you well there Wanted talk the the initiative we on scenes, expansion? more just hoping as factors can to you that contribute little the route any that framing that to that see a some outlined talk margin these the goals. just just consolidation about contributors I you to XXXX initiatives of as I biggest

Christopher Pappas

margin, just Kelly? about or When though, margin, you're bottom say talking you gross margin line

Kelly Bania

X.X% adjusted Yes, by of X% XXXX. EBITDA the to goal margin

Christopher Pappas

Yes.

think I it's Goldilocks.

a everywhere. it's bit think I little

and our teams digital Our better. teams just pricing get continue to

where been shortages at our you change an what's challenging. lot has of you chocolate happening look in market, in and to to it, have more what able it's where doing in we're volatility products. When this pricing or the environment manage you a So now had massive inflation climate do

it's it's the routing, think management teams, larger but as now out get to the starts to warehouses, I going bottom say, we're always -- category we've get of team. volume built you and more increase, that operation Like to So part efficiencies teams, there's in line. of always you're these so pricing to many the trying the

As up is business long well, strong business to you is core you're a of good business. ton to, a the top that as softness Chefs' fill not guess, not at low just line shed core and expectation is have warehouse to your our -- is of customers, adding we I margin. we Warehouse I mean, long-term part think continue business softness

some and our line give to our figure little we'll to Sometimes continue and raise because can maybe see to grow goes softer that's years profitable. how finding away place time business. we're than a We've into very willing business try doing space, on that as we're especially we you And that take very why on think to to the space. But have prices somebody that to out it we sometimes for profit to that anticipate and disciplined. that top we up we we on a make been business, where just we don't find that that that start that start business sometimes I of business. shed And we're

economy be us that that's to profit many the to starts and what tailwind, I more pick think because following on got starting It's willing of get sell years. you're leverage starting for to And business. let with hopefully bit to as been overhead. everybody drops not we're go company. more bottom and that see. the to to We're you've more So margin GP the some built a I of And a the you've to mean, up little line

Kelly Bania

all, openings? openings. environment Chris, That's if particularly how, your the of or openings about and you rate restaurant just couple are core base lower you've from at may their hearing then, talked helpful. for of impact of plans What kind their quarters maybe in new past customer a new pace And

Christopher Pappas

are into come Yes. in landlords Well, and changed great going going COVID, leases coming I up, few that to restaurants getting been draw office. again, the I And And developments working where business need we especially be traffic put they're think our the who that what buildings, XX a a people to workplace, people facing, neighborhoods right? have have to suburbs XX, we XX, with great, and of more. that a that lot remotely office. have and customers lot core have of I opportunistic. out are in a close. But mean restaurants said independents, there's lot have their more could has restaurants of COVID local right, back that live the the the they've new how A out they or as

Obviously, what restaurant they interest I restaurants, think continue to that. but help, tours rates that's to So we openings. do. can you're saw strong see And going in growth build

restaurants. location don't see and been they're in really a they the So -- enticing if end sense, landlord open economics going them make find sight. and that's that's we've and I And a to think what come great seeing I in an or to

Operator

question Benchmark Brooks next from of Company. comes The Todd

Todd Brooks

efficiency in quick about revenue-driving what are Chef? bring hoping outside A the this global a to what can viewpoints you may. Chris, an that unlock are few has you standpoint? the Just questions, outside hoping that presentation if I'm engaged talked standpoint? is consulting either from that Or just you might I talent Chef firm. wondering a

Christopher Pappas

Sure.

I best AI. the the with we're obviously everybody help almost changed has great in AI we start-up the -- kind great tools AI, like we talent ran make are people. like to the of of so using a that replace the can't we -- mean, people more technology the is obviously, business and systems. developed we mentality, always we've And you So so getting AI. business, We're people. talking And much. about keeping sure and them. But future our see obviously,

us think an projects do eyes, through to Todd, things fresh we pair that looking help of can and some of outside to if I go better. always a just we're give So it's the of at perspective

Todd Brooks

Great. Okay.

I'm the you Secondly, I views on asking to end the But holiday? call. this kind from and we around know reads, question, about you're holiday? but know early reads than hearing they later this from of historically any October are their on a holiday peak you tend bit Chris, feedback what customers hearing get early or demand, your usually conference little on customers that I of bookings did the that happen to

Christopher Pappas

Yes.

days our customers I'm few month, goes, weeks new something, sure, that has is people book was of have ahead. changed Yes, ahead. but positive. have is X, I I talking pretty last few of booked The actually to get think that X and the that for. since last for going are last parties tend X, is tone customers. I he a to send is far other minute, lot don't book where would to that is, the COVID, stuff the Normally, next months be we they And in wouldn't one -- a thing to of environment there Chris. you to like you one this you not book, that and week. These much a long-time they say the ready on although the day hit they minute, overall so but conferences just

like. You XX% uptick of it it get this you a okay, probably look need. looks This we're XX%, -- at staff your we'll the in is all of bookings. sudden, what kind And and say, is

COVID everything, parties, but missing, used challenging we're creates a very strongest business about of that, small bit that's but the very for just environment, I little most. obviously, they're planning, to adapting. booking it So think for during getting more that's for the They're lunches. we that. with was client the -- meetings, And that I we've And course, dinners, see what we're that's And for celebrations, think back, for hearing. think coming that I part pleased been excited

Todd Brooks

think X%. one you I jump in little in quarter Okay. one, of Great. final the inflation And talked about a queue. I'll Jim, back and and north

any thinking for categories the on you're that couple X% specialty the You 'XX? thinking we the into kind as of quarter? of inflation being of highlight rest X% easing early reads range. that Is that a and of and about fourth in forward any really inflation saw go And how kind pricing sources basket outsized to of in that

James Leddy

the Todd. product price, mix products that. No, And volume mix we boxes. really on think product highlighted and exactly They're higher volume price. Thanks, never can and then predict it chocolate Yes. dollar impacts and you had because impact a dairy because I the mix

-- heavily playing to And I this of revenue definitely you good volume, quarter. But been but grow lower you growth, year, really this they weighted dollar of to past we And bit profit first little that's when to you year. kind get we half the X% organic generated guided have out. a growth X% them quarter-over-quarter, think which more gross so of the

horizon go So into the as X% getting anything full that's see to basis. going that year to be on quarter, we the on a materially we fourth don't from think I to different X%

now. so it will at think least plays right I And the similar it out, be way

Operator

BTIG. from comes Saleh Peter question next of Our

Peter Saleh

little markets I markets, and are a differently using York new those customers markets talk areas in seeing could customers you And New the more maturity? you hoping just bit Texas Florida some like follow-up. and Northeast was the in California? use your more on then mature of Are you have based you versus a and about of do I -- how

Christopher Pappas

we divisions, specialty our besides mean, Yes. markets, we divisions, protein mature have our Yes. have I and produce more Peter, broadline. obviously,

that all of have And presence kind that's in a goal to more in shop of really, we're markets. many ways the mature So to be in markets. our one-stop able

young a that markets which have our the warehouses start of facility buying to company, a always certain now small from as our and and in continues more like like of our benchmark, say kind more specialty markets, those like I kind from entered New growing is Nashville And protein yes, business we mature we So then to looking as more specialty. protein -- specialty some that grow selling to most business. like go we're market, biggest up, York, usually protein and there's then on focus us. And really people and

as they So They're happy can. growing we're in as really all all markets. fast

and As you've that's got specialty. experts in to staff protein that relationship got that we have say, to team that produce you've becomes and trained, build

that so And time. takes

what grow. all allows of a growing we're and to really think with with their our as them their inventory they're place good I the allows they markets ability them in as can fast So warehouse and to

Peter Saleh

my last then just And question. Great.

On these margin all XXXX the acquisitions EBITDA points years? it in X call just the for to XX contemplated call next organic of it bridge the are strictly XX, this is and at basis growth expansion, financials? Or based on

James Leddy

don't so based It's opportunistic, we acquisitions them model Obviously, on in. organic. are

Operator

of Lake question comes Ben from Capital Klieve Street next Markets. Our

Benjamin Klieve

to lower-margin I'm here. referred another a both which have to of help the you because Congratulations margins dynamic nice on couple impact the got of a around able quantify from either degree expanded that all, if this of of kind to of revenue the and/or rationalization to first gross initiative? -- that business. been you're quarter headwind wondering, growth have around the Jim, of perspective I've

James Leddy

Ben. has demand our way industry I And little called bit mean, bit a top especially -- line related because don't has us, think, about business. we it weaker is center-of-the-plate, you a for part Yes. year a this little out I But noncore that some of it of been it weaker. We been Thanks, out, attrition think of break think I the is to then the exactly. some across

inventory damages work teams well and to the there's that it better our sales so with and number see and reducing that go And profit that. into of started work business. it is as you that integrate management portion as gross done pricing we've of pricing margin have sales some of A of operations all models and of is good and returns on. waste expansion, teams it teams and in lower-margin of things Part the around our attrition a

components. And mentioned, So a as there's that of a thing kind naturally lot different happens. it's of Chris

of some will As out the and attrite that we you do acquisitions done, you time. over of noncore that inherit some do we've business

but so this year. seen So really did far in quarter, nothing of contributor have specifically a we -- the out we dynamics it's call obviously some to to the

Christopher Pappas

Yes. And I think I could give you a little bit more color.

it's so from, a from -- Looking coming at bit it, everywhere. I is improvement the think, margin coming and little

up some salespeople the is more then usually go they're the the And said, really margin. that expansion like because overall goes Jim does margin the So low business go part away, naturally up of margin of the the learning just margin how opportunities. to book. And and sell, from sell because of tends maturing can more to coming have you products more you help

X you're So locked just that you're not X, kind items in. of selling

sell margin. have You longer a to the, tend call I lot get higher that tail to a them, items of

Chefs' start a we're in our those as we that companies few really bought tends they than more best especially we last So business bought of at natural lower mature, attrition from goal like example had business to We their half continue of low-margin that maybe more to we're much let business it. is, And model we give Warehouse. grow. And start a same to starts and markets obviously I margin enter look the a how margin a little kind other the Texas Chefs' it's that of little like enter a and markets what we running they to New years. The And had Chefs' too the they that where pleased say, bit to would that's grow with as Warehouse, more to Warehouse. to and our And England. and so and us. of to a maybe look playbook as kind market continue and great of go a had profile

Benjamin Klieve

And evolved? calling helpful has I'm today? your That's philosophy very more this these unchanged of you pencils has Or thought really Great. curious of this a from pre-pandemic? it you. more maybe you're just than Are customers of how on process as today kind lower-margin about and on products your sharpening did or kind you been follow-up, both out

Christopher Pappas

that the more same get can't lie this think we're for some okay? out. costs mean, a psychologically long volume enough make a do we'll the just you it And more. that hasn't a XX philosophy that changed, Everything plumber, more, the more, ago. really it we're Labor just And money. just think figure suffered it. I Again, job have to costs reality doing but good the do reality stresses paid you the cost it Building lot it that as We'll I've -- facilities you yourself. I and that eventually, work costs -- I call okay, don't So been more. you lot did doesn't to way. pre-COVID. going you the it Yes. to saying, years to from I you you is

at give with company. high-touch It's We're into low You tremendous get our very model. We just service. a not selling tied cost. a margin high

linens price and service, Motel to and great going it and So a like you of hotel it's Seasons the great do got got kind Four X. can't a of at you you

to think to We model need So on try mat our food that's everything clientele to [ be why People our not are to our sell we know just and is continue to who grow. we everybody. don't good and we dining, ] want we to love everybody. great to grow stay because and continues

Benjamin Klieve

quarter, nice Appreciate good. on color. the Congratulations keep again that the Very up good work.

Christopher Pappas

Thanks, Ben.

Operator

Pappas, over question-and-answer we've will of CEO, I hand appears remarks. now closing to our Chris for session. It the reached the end

Christopher Pappas

of strive to for we're continue We're to specialty the our and become chefs to up supplier as today. put we another look they call. our and food you. in thank forward and joining moving best everybody better a all Well, Sure. call next our everybody leading great so better, world. forward we quarter initiatives the proud for that And the thank our Thank team, we

Operator

Thank gentlemen, disconnect concludes Thank may Ladies and us sir. lines. you today's now you, this you and joining event. for your

The Chefs' Warehouse, Inc. (CHEF) 30 Oct 242024 Q3 Earnings call transcript