Executive Summary

Q2 2025 delivered solid growth and margin expansion: net sales rose 8.4% to $1.035B, gross margin widened 59 bps to 24.6%, GAAP diluted EPS was $0.49 and adjusted EPS was $0.52 .
Versus S&P Global consensus, revenue and EPS beat while EBITDA was slightly below: Revenue $1.035B vs $1.013B estimate; Primary EPS $0.52 vs $0.46 estimate; EBITDA $59.3M vs $62.2M estimate (adjusted EBITDA was $65.4M). Guidance was raised for FY25 across revenue, gross profit, and adjusted EBITDA, a positive catalyst for the stock *.
Mix actions in Texas (Hardie’s) continue to lift profitability but depress reported volumes (center-of-the-plate pounds down 4% reported; +5.8% excluding attrition), and specialty cases +3.5% (+5.8% ex program exit), with continued unique customer and placement growth .
Management highlighted moderating sequential inflation, manageable tariff impacts, and strong liquidity ($260.3M) and leverage (~2.3x net debt/adj. EBITDA), supporting execution and buybacks under the $100M program .

What Went Well and What Went Wrong

What Went Well

“Second quarter business activity displayed typical seasonality as revenue and profitability improved across our network,” with strong unit volume and unique item placement growth in both domestic and international divisions .
Gross margin expanded ~59 bps (to 24.6%) on pricing/procurement execution and digital adoption; management noted early benefits from initiatives (Select Prime, digital ordering now ~60% of specialty) supporting GP dollar growth and margin improvement .
FY25 guidance raised: net sales to $4.00–$4.06B, gross profit to $964–$979M, and adjusted EBITDA to $240–$250M, reflecting confidence in 2H trajectory and operating leverage .

What Went Wrong

Reported center-of-the-plate pounds fell ~4% YoY, driven by attrition of a non-core commodity poultry program (approx. 10% of total pounds); excluding this, pounds grew ~5.8% YoY .
SG&A increased 9.7% to $213.8M (20.7% of sales vs. 20.4% last year) on higher compensation/benefits, depreciation from facility/fleet investments, and self-insurance costs .
EBITDA was modestly below consensus (GAAP EBITDA $59.3M vs. $62.2M estimate), despite strong adjusted EBITDA ($65.4M) and margin expansion; CFO flagged tariffs as a low single-digit inflation risk into 2H *.

Financial Results

Quarterly Trend (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Millions)	$1,034.0	$950.7	$1,034.9
Gross Profit ($USD Millions)	$251.0	$226.0	$254.3
Gross Margin %	24.3%	23.8%	24.6%
SG&A ($USD Millions)	$206.8	$202.8	$213.8
SG&A / Net Sales %	N/A	21.3%	20.7%
Operating Income ($USD Millions)	$46.5	$22.7	$40.2
Operating Margin %	N/A	2.4%	3.9%
GAAP Diluted EPS ($)	$0.55	$0.25	$0.49
Adjusted EPS ($)	$0.55	$0.25	$0.52
Adjusted EBITDA ($USD Millions)	$68.2	$47.5	$65.4

Year-over-Year (Q2)

Metric	Q2 2024	Q2 2025
Net Sales ($USD Millions)	$954.7	$1,034.9
Gross Profit ($USD Millions)	$229.0	$254.3
Gross Margin %	~24.0% (implied)	24.6% (+59 bps)
SG&A ($USD Millions)	$194.8	$213.8
Operating Income ($USD Millions)	$33.9	$40.2
Operating Margin %	3.6%	3.9%
GAAP Diluted EPS ($)	$0.37	$0.49
Adjusted EPS ($)	$0.40	$0.52
Adjusted EBITDA ($USD Millions)	$56.2	$65.4

KPIs and Category Mix

KPI	Q1 2025	Q2 2025
Specialty category case growth (YoY)	+5.7%	+3.5% (reported); +5.8% ex TX produce program
Unique customers (YoY)	+4.5%	+3.6%
Placements (YoY)	+7.7%	+8.7%
Center-of-the-plate pounds (YoY)	-1.3% (reported); +3.0% ex commodity program	-4.0% (reported); +5.8% ex commodity program
Effective tax rate	17.6%	28.0%
Liquidity	$278.9M (cash + ABL availability)	$260.3M (cash $96.9M + ABL $163.4M)
Net debt / Adjusted EBITDA	~2.4x	~2.3x

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Net Sales ($USD Billions)	FY 2025	$3.96–$4.04	$4.00–$4.06	Raised
Gross Profit ($USD Millions)	FY 2025	$954–$976	$964–$979	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	$234–$246	$240–$250	Raised
Fully diluted share count (guidance)	FY 2025	~46.3–47.0M	~46–47M	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Inflation & Tariffs	Modeled 2–3% commodity inflation ex chocolate/eggs; manageable tariff pass-through/substitution	Reported Q2 inflation 7.2% (mix-inflated); excluding TX program exits ~3% overall; specialty ~2.3%, center-of-the-plate ~4.1%; tariffs expected low single-digit impact	Moderating sequentially; manageable
Hardie’s (Texas) integration & attrition	Strategy to “chef-size” acquisitions; trading out of low-margin programs; expected multi-year transformation	Center-of-the-plate pounds -4% reported; +5.8% ex attrition; specialty cases +3.5% reported; +5.8% ex produce program; full lap in 2H next year	Profit mix improving; volume optics depressed
Digital adoption	Specialty online ordering reached 56% in Q4; expanding to Hardie’s and Middle East	~60% of specialty orders online; ~40% YoY order growth; margin/GP dollars per route improving	Structural margin tailwind
Margin trajectory	Q4 gross margin +23 bps; OpEx leverage weighted to back half	Q2 gross margin +59 bps; adjusted OpEx ~18.25% of sales; emphasis on GP dollars per unit/drop	Upward bias with operating leverage
Demand/Tourism/Back-to-office	Resilient upscale demand; minimal tourism drag; suburban strength	“Goldilocks” demand; seasonally slow big cities balanced by shore; tourism rebalancing; business lunches improving	Resilient; balanced
M&A pipeline	Opportunistic tuck-ins; capacity-focused investment	Pipeline “always active” (valuations matter); expect tuck-ins to feed capacity; national footprint expansion	Selective, accretive tuck-ins

Management Commentary

CEO: “Second quarter business activity displayed typical seasonality as revenue and profitability improved across our network… high-touch, flexible distribution platform continues to drive our company forward.”
CFO: “We are raising our full-year guidance… net sales $4.0–$4.06B, gross profit $964–$979M, adjusted EBITDA $240–$250M,” and expect diluted share count ~46–47M due to convertibles .
On Texas: “Shedding… highly transactional, high-volume, low-dollar, low-margin programs… getting rid of them will make us a more profitable company… benefits in distribution and operations already visible” .
On tariffs and inflation: “We did see a few points of inflation… chocolate and olive oil have come down… produce has been deflationary… moderate sequential inflation; nothing big on the horizon” .

Q&A Highlights

Demand resilience and tourism: Management sees “Goldilocks” demand, with rebalancing of tourism and seasonal shifts; shore markets offset big-city seasonality .
Hardie’s attrition magnitude: Center-of-the-plate pounds -4% reported but +5.8% excluding the program; full lap expected in second half of next year; profit mix improving .
Inflation outlook: Excluding mix effects, overall inflation ~3%; specialty ~2.3%, center-of-the-plate ~4%; tariffs modeled as low single-digit impact, sequential specialty/produce deflation .
Gross margin sustainability: Gains reflect multiple initiatives (pricing/procurement, digital, inventory tech) plus the mix shift away from low-margin programs; margins are output, focus is GP dollars per unit/drop .
Guidance cadence: Raised FY25 guidance reflects strong comps in 2H last year and seasonality; implies ~6% 2H revenue and ~14% 2H EBITDA growth with continued operating leverage .

Estimates Context

Metric (Q2 2025)	S&P Global Consensus	Actual	Outcome
Revenue ($USD)	$1,013,532,820*	$1,034,906,000	Beat*
Primary EPS ($)	$0.461*	$0.52*	Beat*
EBITDA ($USD)	$62,167,960*	$59,313,000	Miss*
Primary EPS – # of Estimates	7*	N/A	—
Revenue – # of Estimates	7*	N/A	—

Values retrieved from S&P Global.*

Implications: Revenue and EPS beats suggest upward pressure on near-term EPS estimates; the modest EBITDA miss vs GAAP EBITDA is offset by strong adjusted EBITDA ($65.4M), supporting margin trajectory .

Key Takeaways for Investors

Revenue and EPS beats with gross margin expansion (+59 bps) underscore pricing/procurement execution and digital tailwinds; adjusted EBITDA growth (+16% YoY) supports multi-year margin improvement targets .
FY25 guidance raised across revenue, gross profit, and adjusted EBITDA; implies healthy 2H growth and continued operating leverage—potential positive estimate revisions and sentiment tailwind .
Texas transformation remains a near-term optical headwind to reported volumes but is a clear profitability lever; expect cleaner comparables after lapping program exits next year .
Inflation sequentially moderating; tariff exposure manageable with substitution breadth (130+ olive oils, wide SKU set), reducing risk to margins and demand .
Balance sheet/liquidity strong ($260.3M) with net leverage ~~2.3x, term loan repriced (SOFR + 3%), and buyback progress (~~$27M to date)—providing optionality for tuck-ins and shareholder returns .
Watch mix/inflation disclosures: management provides ex-attrition metrics; focus on GP dollars per drop and adjusted OpEx% to gauge underlying margin health .
Near-term trading: Guidance raise and margin expansion are the key catalysts; any signs of tariff escalation or demand softness in core markets would be the primary risk factors to monitor .

Chefs' Warehouse, Inc. (CHEF)·Q2 2025 Earnings Summary