Executive Summary

Q4 2024 delivered Chefs’ first $1B+ revenue quarter with net sales of $1,033.6M (+8.7% YoY), gross margin expanded ~23 bps to 24.3%, and adjusted EBITDA rose 16% to $68.2M; diluted and adjusted diluted EPS were both $0.55 .
Demand was “consistently strong” through the holiday season; specialty category growth led (cases +6.1%, unique customers +4.5%, placements +12.3%), and center‑of‑the‑plate pounds rose +3.6% .
2025 outlook introduced: net sales $3.94–$4.04B, gross profit $951–$976M, adjusted EBITDA $233–$246M; expected diluted shares 46.3–47.0M, leverage targeted ~2.5x–2.8x near‑term .
Street consensus from S&P Global was unavailable at time of analysis due to an access limit; as a result, we cannot quantify beats/misses versus estimates this quarter (see Estimates Context).

What Went Well and What Went Wrong

What Went Well
- First-ever $1B+ quarter with broad-based strength; specialty mix and cross-sell in Texas lifted average revenue per case and supported margin expansion (GM +23 bps to 24.3%) .
- Operating leverage materialized in Q4 after lapping facility investments; operating income rose to $46.5M (4.5% margin) from $38.2M (4.0%) YoY; adjusted EBITDA reached $68.2M vs. $59.0M .
- Liquidity improved and leverage declined: cash $114.7M, ABL availability $146.7M (total liquidity $261.4M); net debt/adj. EBITDA ~2.5x vs. ~3.4x at YE23; $17.4M of buybacks in 2024 .
- “Our teams…delivered the first one billion plus revenue quarter in Chefs’ Warehouse history” – CEO Christopher Pappas .
What Went Wrong
- Category inflation remained uneven: chocolate stayed elevated; egg inflation from avian flu cited as current headwind; meat supply tightness may persist 2–3 years .
- Hardie’s (Texas) remains a near-term margin dilutor (~20–25 bps overall) while integration and mix shift progress; management expects improvement over time .
- Street consensus comparisons (EPS/Revenue/EBITDA) were unavailable due to S&P Global access constraints this cycle, limiting external benchmark context (see Estimates Context).

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Net Sales ($USD Millions)	$950.5	$954.7	$931.5	$1,033.6
Diluted EPS ($)	$0.38	$0.37	$0.34	$0.55
Adjusted Diluted EPS ($)	$0.47	$0.40	$0.36	$0.55
Gross Profit Margin (%)	24.0 (calc from GP/NS)	24.0	24.1	24.3
Operating Income ($USD Millions)	$38.2	$33.9	$31.9	$46.5
Adjusted EBITDA ($USD Millions)	$59.0	$56.2	$54.5	$68.2

Segment/Category KPIs

Volume/Mix and Customer Metrics

KPI (Organic)	Q2 2024	Q3 2024	Q4 2024
Specialty case count growth (%)	+4.7%	+3.1%	+6.1%
Unique customers (%)	+8.2%	+4.7%	+4.5%
Placements (%)	+11.3%	+10.8%	+12.3%
Center‑of‑the‑plate pounds (%)	+2.9%	+1.0%	+3.6%

Inflation Summary

Inflation	Q3 2024	Q4 2024
Net inflation	3.2%	3.8% (≈3.0% ex Texas cross‑sell)
Specialty	4.3%	5.1%
Center‑of‑the‑plate	1.4%	1.8%
Notes	Chocolate/dairy elevated	Chocolate elevated; Texas cross‑sell mix impact

KPIs and Operating/Balance Sheet Highlights

Digital ordering penetration at domestic specialty: ~56% in Q4 2024 vs 48% in 2023 and 20% in 2019 .
Liquidity: cash $114.7M; ABL availability $146.7M; total liquidity $261.4M (12/27/24) .
Net debt ≈ $557.8M; net debt/Adj. EBITDA ≈ 2.5x (vs 3.4x YE23) .
Share repurchases in 2024: $17.4M .

Guidance Changes

2025 Guidance (introduced in Q4 2024)

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY 2025	N/A	$3.94B–$4.04B	New
Gross Profit	FY 2025	N/A	$951M–$976M	New
Adjusted EBITDA	FY 2025	N/A	$233M–$246M	New
Diluted Shares	FY 2025	N/A	~46.3M–47.0M	New

FY 2024 Guidance Progression vs Actuals

Metric	Q2 2024 Guidance	Q3 2024 Guidance	FY 2024 Actual
Net Sales	$3.665B–$3.785B	$3.710B–$3.775B	$3.794B
Gross Profit	$874M–$902M	$890M–$906M	$914.1M
Adjusted EBITDA	$208M–$219M	$210M–$219M	$219.0M

Interpretation: FY24 was delivered at/above the high end on each of net sales, gross profit, and adjusted EBITDA, supporting credibility of the FY25 outlook .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Digital/Technology & AI	Q3: 54% online; engaged a global consulting firm; using AI to enhance processes . Q2: emphasis on execution; no specific digital % disclosed .	56% of specialty customers now order online; continued investments to drive margin and salesforce productivity .	Improving penetration and capability .
Supply chain/operations	Q3: route consolidation, facility integrations; Northern CA processing consolidation underway .	Northern CA consolidation completed in Dec‑2024; broader capacity and efficiency runway; ongoing footprint optimization .	Execution milestone achieved; leveraging scale .
Tariffs/macro	Limited prior commentary.	Potential tariff risk (MX/CA/EU); diverse sourcing (4,000+ suppliers) and ability to pass/pivot; egg inflation called out; meat tightness persists 2–3 yrs .	Manageable; monitoring inflation hotspots .
Product inflation/mix	Q3: chocolate/dairy inflation; mix impacts volume vs price .	Chocolate still elevated; eggs significant headwind; net inflation 3.8% (≈3% ex Texas mix) .	Mixed; headline elevated in select categories .
Regional strategy (Texas/Hardie’s)	Q3: Texas EBITDA margin +110 bps YTD YoY; Hardie’s dilutes overall margin 20–25 bps; multi‑year ramp .	Additional Houston space; offboarding non‑core; multi‑year transformation continues .	Steady progress toward higher‑margin mix .
Capex/capacity	Q3: investment period; leverage targeted 2.5–3.0x .	FY25 capex $40–$50M; major projects in Philadelphia/South NJ and Portland; long‑term target ~1% of revenue .	Normalizing capex with selective growth projects .

Management Commentary

“Business activity and demand remained consistently strong… and delivered the first one billion plus revenue quarter in Chefs’ Warehouse history” – Christopher Pappas, CEO .
“Net inflation was 3.8%… 5.1% in specialty and 1.8% in center‑of‑the‑plate… excluding Texas cross‑sell, overall was ~3%” – Jim Leddy, CFO .
“In 2025… our goal is… incrementally… improve operating leverage and EBITDA margin by 20–25 bps per year” – Management .
“We completed [Northern California] consolidation of four processing facilities into one… early innings with room for growth and cost synergies” – CFO .
“Eggs… biggest headwind… chocolate… still inflated… otherwise seeing 2–3% commodity inflation with some volatility” – CEO .

Q&A Highlights

Demand cadence/weather: Q4 was “evenly solid”; January fires in L.A. had minimal impact .
Tariff exposure: diversified supplier base; historically able to pivot/pass through; main exposure in produce from Mexico; expects manageable impact .
2025 margin drivers: continued gross profit dollar growth and operating leverage; target 20–25 bps annual EBITDA margin improvement over next four years .
Texas/Hardie’s trajectory: ongoing cross‑sell and mix shift; Hardie’s diluting ~20–25 bps currently but improving; multi‑year transformation .
Capex and utilization: FY25 capex $40–$50M focused on Philly/South NJ and Portland consolidations; automation reducing labor needs in processing .
Inflation outlook: excluding eggs/chocolate, categories generally in 2–3% band; meat tightness remains .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 2024 (revenue, EPS, EBITDA), but the API returned a daily request limit error, so consensus benchmarks were unavailable at the time of analysis. As a result, we cannot quantify beats/misses versus Street this quarter. Values would normally be retrieved from S&P Global.

Key Takeaways for Investors

Quality of growth: Specialty-led expansion, cross-sell in Texas, and digital adoption supported gross margin expansion and delivered record revenue/EBITDA in Q4 .
Operating leverage inflecting: After lapping facility investments, Q4 showed margin leverage; management targets 20–25 bps annual adjusted EBITDA margin gains through 2028 .
Balance sheet optionality: Liquidity of $261M+ and net leverage ~2.5x provide flexibility for buybacks (already $17.4M in 2024), selective capex, and disciplined M&A .
Watch inflation hot spots: Eggs (avian flu) and chocolate remain elevated; management sees broader 2–3% inflation with volatility and pricing tools to manage mix/margin .
Texas is a multi‑year catalyst: Integration and offboarding of non‑core business should narrow Hardie’s dilution and drive category penetration—key determinant of medium‑term margin trajectory .
2025 outlook credible: FY24 finished at/above high end of guidance across net sales, gross profit, and adj. EBITDA; FY25 guide implies continued top‑line and EBITDA growth with disciplined capex .
Trading implication: The combination of record Q4 execution, new FY25 guide, and leverage reduction is supportive for sentiment; near‑term stock drivers include inflation normalization (eggs/chocolate), pace of Texas mix shift, and evidence of sustained operating leverage .

Notes on non‑GAAP

Adjusted EBITDA excludes stock compensation, duplicate rent, moving expenses, and other operating items (e.g., changes in fair value of contingent liabilities). Q4 adj. EBITDA was $68.2M vs EBITDA of $63.8M; full‑year adj. EBITDA $219.0M .
Adjusted net income per share was $0.55 in Q4; adjustments primarily duplicate rent, moving expenses, and other operating items, with tax normalization to a 30.0% ETR in Q4 .

Chefs' Warehouse, Inc. (CHEF)·Q4 2024 Earnings Summary