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Chefs' Warehouse, Inc. (CHEF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net sales rose 8.7% to $950.7M and GAAP diluted EPS was $0.25; both exceeded Wall Street consensus, with revenue beating by ~$24.2M and EPS by ~$0.06. Management cited typical seasonality and strong growth in unique item placements, with solid operating leverage versus Q1 2024 .
  • Adjusted EBITDA increased to $47.5M (+18% YoY), while gross margin dipped 18 bps to 23.8% due to mix and elevated chocolate/egg pricing; specialty gross margin rose 6 bps, center‑of‑the‑plate fell 83 bps .
  • Guidance nudged higher at the low end: FY25 net sales $3.96–$4.04B (from $3.94–$4.04B), gross profit $954–$976M (from $951–$976M), and adjusted EBITDA $234–$246M (from $233–$246M). Convertible notes are expected to be dilutive, driving 46.3–47.0M diluted shares in FY25 .
  • Near-term stock catalysts: clear revenue/EPS beat, strong cash generation ($49.6M CFO), and low-end guidance raise; call commentary framed tariffs as manageable and demand resilient, potentially supporting estimate revisions and sentiment .

What Went Well and What Went Wrong

What Went Well

  • Net sales +8.7% YoY to $950.7M; specialty sales +10.7% with unique customers +4.5%, placements +7.7%, specialty case count +5.7%—demonstrating share gains and breadth expansion .
  • Operating leverage: SG&A grew 6.5% vs revenue +8.7%, driving operating income up to $22.7M (2.4% margin) from $16.0M (1.7% margin) in Q1 2024 .
  • Quote: “Our business units, international and domestic, delivered strong growth in unique item placements and solid operating leverage versus the prior year first quarter” — Christopher Pappas (CEO) .

What Went Wrong

  • Gross margin down 18 bps to 23.8% YoY, with notable center‑of‑the‑plate margin compression (‑83 bps) amid higher-dollar mix and volatile chocolate and egg pricing .
  • Reported center‑of‑the‑plate pounds decreased ~1.3% YoY; attrition of a high‑volume, low‑margin commodity poultry program lowered reported sales by ~0.7% YoY (ex‑attrition, center‑of‑the‑plate pounds +3%)—a near‑term volume headwind .
  • EBITDA (Street) lens: EBITDA of $41.1M trailed S&P consensus mean ($45.2M*), reflecting margin pressure and mix; however, adjusted EBITDA was $47.5M .
    *Values retrieved from S&P Global.

Financial Results

Multi-Quarter Performance (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$931.5 $1,033.6 $950.7
Gross Profit ($USD Millions)$224.7 $251.0 $226.0
Gross Margin (%)24.1% 24.3% 23.8%
Operating Income ($USD Millions)$31.9 $46.5 $22.7
Operating Margin (%)3.4% 4.5% 2.4%
GAAP Diluted EPS ($)$0.34 $0.55 $0.25
Adjusted EBITDA ($USD Millions)$54.5 $68.2 $47.5
Adjusted Diluted EPS ($)$0.36 $0.55 $0.25

Beat/Miss vs S&P Global Consensus

MetricQ1 2025 Consensus*Q1 2025 ActualSurprise
Revenue ($USD Millions)$926.6*$950.7 +$24.1
Primary EPS ($)$0.195*$0.25 +$0.055
EBITDA ($USD Millions)$45.2*$41.1 -$4.1
*Values retrieved from S&P Global.

Segment and Category Snapshot (Q1 2025)

CategoryYoY Volume/CaseYoY Customer/PlacementMargin Change
SpecialtyCase count +5.7% Unique customers +4.5%; placements +7.7% +6 bps
Center-of-the-PlatePounds -1.3% (ex-attrition +3%) n/a-83 bps
Noncore Program AttritionSales impact ~-0.7% YoY n/an/a

KPIs and Balance Sheet/Liquidity

MetricQ3 2024Q4 2024Q1 2025
Online order adoption (domestic specialty)48% YE23 baseline 56% YE24 58%
Cash from Operations ($USD Millions)n/aFY24 $153.1 $49.6
Cash ($USD Millions)$50.7 $114.7 $116.5
Total Liquidity ($USD Millions)n/an/a$278.9 (Cash $116.5 + ABL $162.4)
Net Debt / Adjusted EBITDA (x)n/an/a~2.4x

Guidance Changes

MetricPeriodPrevious Guidance (as of Q4 2024)Current Guidance (Q1 2025)Change
Net Sales ($USD Billions)FY 2025$3.94–$4.04 $3.96–$4.04 Raised (low end)
Gross Profit ($USD Millions)FY 2025$951–$976 $954–$976 Raised (low end)
Adjusted EBITDA ($USD Millions)FY 2025$233–$246 $234–$246 Raised (low end)
Diluted Share Count (Fully Diluted)FY 2025n/a46.3–47.0M New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Demand/SeasonalityQ3: sequential improvement; softer early summer travel; momentum into Oct . Q4: demand consistently strong; first $1B+ quarter .Typical seasonality; April revenue build tracking normal cadence; resilience across upscale dining .Stable/positive.
Pricing/InflationQ3: margin up 58 bps; disciplined cost control . Q4: margin up 23 bps .Net inflation ~5.2% (specialty 4.8%, center-of-the-plate 5.9%); ex-Texas cross-sell ~3% overall; chocolate/eggs elevated .Elevated category-level inflation; managed sequentially.
Digital/Technology/AINot highlighted in Q3/Q4 press releases.Online ordering reached ~58%; leveraging technology and “AI we have” to build smaller, more efficient facilities and improve ROI .Increasing adoption; tech efficiency focus rising.
Tariffs/Macro FlexibilityQ3: travel dynamics; no tariff detail . Q4: n/a.Tariffs seen as manageable; diversified sourcing; suppliers likely to share burden; freight not tariffed .Cautious, but manageable risk posture.
Regional TrendsQ3: softer July/August with international travel . Q4: broad strength .Las Vegas midweek softness; strong clubs/outdoor dining; Texas cross-sell lifting average case revenue ~12% .Mixed by market; overall steady.
Middle East Businessn/aPerforming “better than expectations”; new facility opened late Dec 2024 .Positive trajectory.
CapEx/FacilitiesQ3/Q4: facility investments cited .Moderated CapEx; NW project targeted end ’25/early ’26; NJ/Philly by late summer ’25; tech-driven smaller, efficient buildings .Disciplined, technology-enabled expansion.

Management Commentary

  • “A few highlights from the first quarter include 8.7% growth in net sales… Specialty sales were up 10.7%… placement growth of 7.7%… specialty case growth of 5.7%… Pounds in center‑of‑the‑plate were approximately 1.3% lower… Excluding this attrition, total center‑of‑the‑plate pounds grew 3% higher than prior year first quarter” — Christopher Pappas .
  • “Excluding the impact of the Texas cross-sell growth, aggregate specialty inflation was approximately 3.1% and overall inflation… approximately 3%… chocolate and eggs remained elevated” — Jim Leddy .
  • “Tariffs… still a small percentage of our overall business… we have many alternative sources… diversified our supply chain… we buy a tremendous amount in the U.S.” — Christopher Pappas .
  • “We’ve moderated our CapEx… NW project complete end of year or early ’26; NJ/Philadelphia towards end of summer… using technology and AI… build smaller buildings and make them more efficient” — Management .

Q&A Highlights

  • Tariffs: Management comfortable; diversified sourcing, suppliers likely to share tariff burden; freight not tariffed .
  • Demand: April tracking normal; resilience across upscale dining; some midweek softness in Las Vegas, offsets elsewhere (clubs/outdoor) .
  • Texas cross-sell: Hardie’s integration increased average revenue per case ~12%; ex-cross-sell, overall inflation ~3% .
  • Center-of-the-Plate attrition: Exiting low-margin commodity poultry program impacted reported volume and sales (~-0.7% YoY), but improves route profitability and capacity redeployment longer-term .
  • Middle East: Strong growth; new facility opened end-Dec 2024; performance better than expectations .
  • Guidance tone: Slight raise to low end; conservatism maintained given macro/tariff uncertainties and strong H2’24 comps .

Estimates Context

  • Q1 2025 vs Street: Revenue $950.7M vs $926.6M* (beat), EPS $0.25 vs $0.195* (beat), EBITDA $41.1M vs $45.2M* (miss vs EBITDA consensus; adjusted EBITDA actual $47.5M) .
  • Prior quarters context: Q4 2024 revenue $1,033.6M vs $1,003.2M* (beat), EPS $0.55 vs $0.507* (beat); Q1 2024 revenue $874.5M vs $833.3M* (beat), EPS $0.15 vs $0.070* (beat) .
  • FY 2025 Street: Revenue ~$4.10B*, EBITDA ~$251.5M*—Street sits slightly above the company’s guidance midpoints; low-end raise and resilient demand may keep top-line estimates firm to higher, while category cost volatility (chocolate/eggs) and mix suggest caution on EBITDA margins.
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue/EPS beat with strong cash generation and improved operating leverage; margin headwinds are category-specific and being managed (specialty margin up; center-of-the-plate compressed) .
  • FY25 guidance tightened upward at the low end (sales, gross profit, adjusted EBITDA), signaling confidence despite tariff/macro noise; fully diluted share count guide (46.3–47.0M) sets expectations for EPS math .
  • Mix and elevated chocolate/egg pricing drove EBITDA (GAAP) below Street; however, adjusted EBITDA trends (+18% YoY) and sequential pricing stability support medium-term margin recovery .
  • Strategic pruning of low-margin business (commodity poultry) should enhance route profitability and capacity utilization; expect near-term volume optics to mask underlying quality improvement .
  • Digital adoption (58% online) and technology/AI-driven facility efficiency are structural drivers of productivity and ROI; watch project milestones (NJ/Philly summer ’25; NW late ’25/early ’26) .
  • Demand resilience across upscale and suburban dining, cruise lines, and clubs supports H1 trajectory; spot softness (Las Vegas midweek) is offset by broader strength .
  • Near-term trading: beat-and-raise (low end) setup with manageable tariff narrative; medium-term thesis: share gains in specialty, disciplined CapEx and tech leverage, and diversification (Middle East) underpin growth with improving efficiency .