The Chefs’ Warehouse, Inc. (NASDAQ: CHEF) (the “Company” or
“Chefs’”), a premier distributor of specialty food products in the
United States and Canada, today reported financial results for its
first quarter ended March 26, 2021.
Financial highlights for the first quarter of
2021:
- Net sales decreased 25.4% to $280.2
million for the first quarter of 2021 from $375.4 million for the
first quarter of 2020.
- GAAP net loss was $17.9 million, or
$(0.49) per diluted share, for the first quarter of 2021 compared
to net loss of $14.1 million, or $(0.48) per diluted share, in the
first quarter of 2020.
- Adjusted EPS1 was $(0.50) for the
first quarter of 2021 compared to $(0.60) for the first quarter of
2020.
- Adjusted EBITDA1 was $(9.5) million
for the first quarter of 2021 compared to $(13.8) million for the
first quarter of 2020.
“As anticipated, January and February business
activity were significantly impacted by the COVID related
restrictions implemented during the fourth quarter of 2020,” said
Chris Pappas, Chairman and Chief Executive Officer of the Company.
“Severe weather, especially in the Northeast, and continued
customer menu compression contributed to lower volumes during the
first few months of 2021. In March, weekly revenue grew steadily as
progress on vaccinations and easing restrictions drove more
customer openings and higher traffic and demand. Sales toward the
end of March 2021 were trending at approximately 75% of 2019 sales,
inclusive of acquisitions completed during the first quarter of
2020.”
First Quarter Fiscal 2021 Results
Net sales for the quarter ended March 26,
2021 decreased 25.4% to $280.2 million from $375.4 million for the
quarter ended March 27, 2020. Organic sales
declined $105.0 million, or 28.0% versus the prior
year quarter. Sales growth of $9.8 million, or 2.6%,
resulted from acquisitions. Organic case count declined
approximately 39.4% in the Company’s specialty category with unique
customers and placements declines
at 22.3% and 34.1%, respectively, compared to the
prior year quarter. Pounds sold in the Company’s
center-of-the-plate category decreased approximately
27.6% compared to the prior year quarter. Estimated inflation
was 6.4% in the Company’s specialty categories
and estimated inflation was 6.1% in the center-of-the-plate
categories compared to the prior year quarter.
Gross profit decreased approximately 31.0% to
$58.9 million for the first quarter of 2021 from $85.5 million for
the first quarter of 2020. Gross profit margin decreased
approximately 173 basis points to 21.0% from 22.8%. Gross margins
in the Company’s specialty category decreased 24 basis points and
gross margins decreased 253 basis points in the Company’s
center-of-the-plate category compared to the prior year
quarter.
Selling, general and administrative expenses
decreased by approximately 26.3% to $80.2 million for the first
quarter of 2021 from $108.9 million for the first quarter of 2020.
As a percentage of net sales, operating expenses were 28.6% in the
first quarter of 2021 compared to 29.0% in the first quarter of
2020. The decrease in costs are primarily due to lower compensation
and benefits and lower general and administrative related costs.
Prior year quarter includes a non-recurring estimated non-cash
charge of approximately $15.8 million related to incremental bad
debt expense at the onset of the COVID-19 pandemic.
Other operating income decreased by
approximately $5.2 million primarily due to non-cash credits of
$1.3 million for changes in the fair value of our contingent
earn-out liabilities compared to non-cash credits of $6.8 million
in the prior year period.
Operating loss for the first quarter of 2021 was
$20.1 million compared to operating loss of $17.1 million for the
first quarter of 2020. The increase in operating loss was driven
primarily by lower gross profit and other operating income,
partially offset by lower selling, general and administrative, as
discussed above. As a percentage of net sales, operating loss was
7.2% in the first quarter of 2021 as compared to operating loss of
4.5% in the first quarter of 2020.
Total interest expense decreased to $4.8 million
for the first quarter of 2021 compared to $5.1 million for the
first quarter of 2020. The decrease in interest expense is the
result of lower average long-term debt balances in the first
quarter of fiscal 2021, primarily the result of the reduction of
principal outstanding on the Company’s senior secured term loan and
asset-based loan facility, partially offset by the issuance of an
additional $50.0 million of convertible senior notes.
Net loss for the first quarter of 2021 was $17.9
million, or $(0.49) per diluted share, compared to net loss of
$14.1 million, or $(0.48) per diluted share, for the first quarter
of 2020.
Adjusted EBITDA1 was $(9.5) million for the
first quarter of 2021 compared to $(13.8) million for the first
quarter of 2020. For the first quarter of 2021, adjusted net loss1
was $18.3 million, or $(0.50) per diluted share compared to
adjusted net loss of $17.7 million, or $(0.60) per diluted share
for the first quarter of 2020.
___________1EBITDA, Adjusted EBITDA, adjusted
net income (loss) and adjusted EPS are non-GAAP measures. Please
see the schedules accompanying this earnings release for a
reconciliation of EBITDA, Adjusted EBITDA, adjusted net income
(loss) and adjusted EPS to these measures’ most directly comparable
GAAP measure.
Full Year 2021 Guidance
Due to the continued uncertainty regarding the
pace of broader economic recovery, lifting of in-room-dining
restrictions across key markets, and the timing of event and travel
related business activity, the Company will not be providing
guidance for 2021 at this time. The Company will look to provide
guidance as it gains more clarity as to the pace of recovery and
outlook regarding these conditions and the broader COVID-19 related
environment.
First Quarter 2021 Earnings Conference Call
The Company will host a conference call to
discuss first quarter 2021 financial results today at 8:30 a.m.
EST. Hosting the call will be Chris Pappas, chairman and chief
executive officer, and Jim Leddy, chief financial officer. The
conference call will be webcast live from the Company’s investor
relations website at http://investors.chefswarehouse.com/. An
online archive of the webcast will be available on the Company’s
investor relations website.
Forward-Looking Statements
Statements in this press release regarding the
Company’s business that are not historical facts are
“forward-looking statements” that involve risks and uncertainties
and are based on current expectations and management estimates;
actual results may differ materially. The risks and uncertainties
which could impact these statements include, but are not limited to
the following: our sensitivity to general economic conditions,
including disposable income levels and changes in consumer
discretionary spending; our ability to expand our operations in our
existing markets and to penetrate new markets through acquisitions;
we may not achieve the benefits expected from our acquisitions,
which could adversely impact our business and operating results; we
may have difficulty managing and facilitating our future growth;
conditions beyond our control could materially affect the cost
and/or availability of our specialty food products or
center-of-the-plate products and/or interrupt our distribution
network; our increased distribution of center-of-the-plate
products, like meat, poultry and seafood, involves increased
exposure to price volatility experienced by those products; our
business is a low-margin business and our profit margins may be
sensitive to inflationary and deflationary pressures; because our
foodservice distribution operations are concentrated in certain
culinary markets, we are susceptible to economic and other
developments, including adverse weather conditions, in these areas;
fuel cost volatility may have a material adverse effect on our
business, financial condition or results of operations; our ability
to raise capital in the future may be limited; we may be unable to
obtain debt or other financing, including financing necessary to
execute on our acquisition strategy, on favorable terms or at all;
interest charged on our outstanding debt may be adversely affected
by changes in the method of determining London Interbank Offered
Rate (LIBOR), or the replacement of LIBOR with an alternative rate;
our business operations and future development could be
significantly disrupted if we lose key members of our management
team; and significant public health epidemics or pandemics,
including COVID-19, may adversely affect our business,
results of operations and financial condition. Any forward-looking
statements are made pursuant to the Private Securities Litigation
Reform Act of 1995 and, as such, speak only as of the date made. A
more detailed description of these and other risk factors is
contained in the Company’s most recent annual report on Form 10-K
filed with the SEC on February 23, 2021 and other reports
filed by the Company with the SEC since that date. The Company is
not undertaking to update any information until required by
applicable laws. Any projections of future results of operations
are based on a number of assumptions, many of which are outside the
Company’s control and should not be construed in any manner as a
guarantee that such results will in fact occur. These projections
are subject to change and could differ materially from final
reported results. The Company may from time to time update these
publicly announced projections, but it is not obligated to do
so.
About The Chefs’ Warehouse
The Chefs’ Warehouse, Inc.
(http://www.chefswarehouse.com) is a premier distributor of
specialty food products in the United States and Canada focused on
serving the specific needs of chefs who own and/or operate some of
the nation’s leading menu-driven independent restaurants, fine
dining establishments, country clubs, hotels, caterers, culinary
schools, bakeries, patisseries, chocolateries, cruise lines,
casinos and specialty food stores. The Chefs’ Warehouse, Inc.
carries and distributes more than 50,000 products to more than
34,000 customer locations throughout the United States and
Canada.
Contact:Investor Relations Jim Leddy, CFO,
(718) 684-8415
THE CHEFS’ WAREHOUSE,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, in thousands except share
amounts and per share data)
|
Thirteen Weeks Ended |
|
March 26, 2021 |
|
March 27, 2020 |
Net sales |
$ |
280,217 |
|
|
$ |
375,431 |
|
Cost of sales |
221,270 |
|
|
289,943 |
|
Gross profit |
58,947 |
|
|
85,488 |
|
|
|
|
|
Selling, general and
administrative expenses |
80,245 |
|
|
108,882 |
|
Other operating (income)
expenses, net |
(1,170 |
) |
|
(6,336 |
) |
Operating loss |
(20,128 |
) |
|
(17,058 |
) |
|
|
|
|
Interest expense |
4,763 |
|
|
5,124 |
|
Loss before income taxes |
(24,891 |
) |
|
(22,182 |
) |
|
|
|
|
Provision for income tax
benefit |
(6,970 |
) |
|
(8,097 |
) |
|
|
|
|
Net loss |
$ |
(17,921 |
) |
|
$ |
(14,085 |
) |
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
Basic |
$ |
(0.49 |
) |
|
$ |
(0.48 |
) |
Diluted |
$ |
(0.49 |
) |
|
$ |
(0.48 |
) |
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
Basic |
36,401,748 |
|
|
29,621,433 |
|
Diluted |
36,401,748 |
|
|
29,621,433 |
|
THE CHEFS’ WAREHOUSE,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETAS OF MARCH 26, 2021 AND
DECEMBER 25, 2020 (in thousands)
|
March 26, 2021 |
|
December 25, 2020 |
|
(unaudited) |
|
|
Cash and cash equivalents |
$ |
175,000 |
|
|
$ |
193,281 |
|
Accounts receivable, net |
99,459 |
|
|
96,383 |
|
Inventories, net |
91,814 |
|
|
82,519 |
|
Prepaid expenses and other
current assets |
32,631 |
|
|
33,479 |
|
Total current assets |
398,904 |
|
|
405,662 |
|
|
|
|
|
Equipment, leasehold
improvements and software, net |
113,450 |
|
|
115,448 |
|
Operating lease right-of-use
assets |
110,726 |
|
|
115,224 |
|
Goodwill |
214,888 |
|
|
214,864 |
|
Intangible assets, net |
108,219 |
|
|
111,717 |
|
Deferred taxes, net |
12,560 |
|
|
7,535 |
|
Other assets |
3,835 |
|
|
3,875 |
|
Total assets |
$ |
962,582 |
|
|
$ |
974,325 |
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
69,461 |
|
|
$ |
57,515 |
|
Accrued liabilities |
26,829 |
|
|
27,924 |
|
Short-term operating lease
liabilities |
16,898 |
|
|
17,167 |
|
Accrued compensation |
10,603 |
|
|
9,401 |
|
Current portion of long-term
debt |
6,043 |
|
|
6,095 |
|
Total current liabilities |
129,834 |
|
|
118,102 |
|
|
|
|
|
Long-term debt, net of current
portion |
396,489 |
|
|
398,084 |
|
Operating lease
liabilities |
105,016 |
|
|
109,133 |
|
Other liabilities |
3,227 |
|
|
4,416 |
|
Total liabilities |
634,566 |
|
|
629,735 |
|
|
|
|
|
Preferred stock |
— |
|
|
— |
|
Common stock |
379 |
|
|
373 |
|
Additional paid in
capital |
304,994 |
|
|
303,734 |
|
Cumulative foreign currency
translation adjustment |
(1,970 |
) |
|
(2,051 |
) |
Retained earnings |
24,613 |
|
|
42,534 |
|
Stockholders’ equity |
328,016 |
|
|
344,590 |
|
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
962,582 |
|
|
$ |
974,325 |
|
THE CHEFS’ WAREHOUSE,
INC.CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS FOR THE THIRTEEN WEEKS ENDED MARCH 26,
2021 AND MARCH 27, 2020 (unaudited, in
thousands)
|
March 26, 2021 |
|
March 27, 2020 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(17,921 |
) |
|
$ |
(14,085 |
) |
|
|
|
|
Adjustments to reconcile net
loss to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
5,107 |
|
|
4,762 |
|
Amortization of intangible assets |
3,539 |
|
|
3,298 |
|
Provision for allowance for doubtful accounts |
(451 |
) |
|
18,431 |
|
Non-cash operating lease expense |
109 |
|
|
244 |
|
(Benefit) provision for deferred income taxes |
(5,025 |
) |
|
(1,900 |
) |
Amortization of deferred financing fees |
864 |
|
|
762 |
|
Stock compensation |
2,458 |
|
|
851 |
|
Change in fair value of contingent earn-out liabilities |
(1,308 |
) |
|
(6,812 |
) |
Loss on asset disposal |
5 |
|
|
42 |
|
Changes in assets and
liabilities, net of acquisitions: |
|
|
|
Accounts receivable |
(2,585 |
) |
|
33,141 |
|
Inventories |
(9,357 |
) |
|
2,501 |
|
Prepaid expenses and other current assets |
850 |
|
|
(8,855 |
) |
Accounts payable, accrued liabilities and accrued compensation |
12,026 |
|
|
(14,311 |
) |
Other assets and liabilities |
26 |
|
|
3,916 |
|
Net cash provided
(used in) by operating activities |
(11,663 |
) |
|
21,985 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Capital expenditures |
(2,896 |
) |
|
(3,093 |
) |
Cash paid for acquisitions, net of cash received |
— |
|
|
(63,450 |
) |
Net cash used in
investing activities |
(2,896 |
) |
|
(66,543 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Payment of debt, finance lease and other financing obligations |
(32,834 |
) |
|
(687 |
) |
Proceeds from debt issuance |
51,750 |
|
|
— |
|
Payment of deferred financing fees |
(1,450 |
) |
|
— |
|
Surrender of shares to pay withholding taxes |
(1,192 |
) |
|
(838 |
) |
Cash paid for contingent earn-out liabilities |
— |
|
|
(500 |
) |
Borrowings under asset based loan facility |
— |
|
|
100,000 |
|
Payments under asset based loan facility |
(20,000 |
) |
|
— |
|
Net cash (used in)
provided by financing activities |
(3,726 |
) |
|
97,975 |
|
|
|
|
|
Effect of foreign currency
translation on cash and cash equivalents |
4 |
|
|
(133 |
) |
|
|
|
|
Net (decrease)
increase in cash and cash equivalents |
(18,281 |
) |
|
53,284 |
|
Cash and cash equivalents at
beginning of period |
193,281 |
|
|
140,233 |
|
Cash and cash
equivalents at end of period |
$ |
175,000 |
|
|
$ |
193,517 |
|
THE CHEFS’ WAREHOUSE,
INC.RECONCILIATION OF GAAP NET LOSS PER COMMON
SHARE(unaudited; in thousands except share amounts
and per share data)
|
Thirteen Weeks Ended |
|
March 26, 2021 |
|
March 27, 2020 |
Numerator: |
|
|
|
Net loss |
$ |
(17,921 |
) |
|
$ |
(14,085 |
) |
Denominator: |
|
|
|
Weighted average basic common
shares outstanding |
36,401,748 |
|
|
29,621,433 |
|
Weighted average diluted
common shares outstanding |
36,401,748 |
|
|
29,621,433 |
|
|
|
|
|
Net loss per share: |
|
|
|
Basic |
$ |
(0.49 |
) |
|
$ |
(0.48 |
) |
Diluted |
$ |
(0.49 |
) |
|
$ |
(0.48 |
) |
THE CHEFS’ WAREHOUSE,
INC.RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
TO NET LOSS(unaudited; in thousands)
|
Thirteen Weeks Ended |
|
March 26, 2021 |
|
March 27, 2020 |
Net loss |
$ |
(17,921 |
) |
|
$ |
(14,085 |
) |
Interest expense |
4,763 |
|
|
5,124 |
|
Depreciation |
5,107 |
|
|
4,762 |
|
Amortization |
3,539 |
|
|
3,298 |
|
Provision for income tax benefit |
(6,970 |
) |
|
(8,097 |
) |
EBITDA (1) |
(11,482 |
) |
|
(8,998 |
) |
|
|
|
|
Adjustments: |
|
|
|
Stock compensation (2) |
2,458 |
|
|
851 |
|
Other operating income (3) |
(1,170 |
) |
|
(6,336 |
) |
Duplicate rent (4) |
695 |
|
|
698 |
|
|
|
|
|
Adjusted EBITDA (1) |
$ |
(9,499 |
) |
|
$ |
(13,785 |
) |
- We are presenting EBITDA and
Adjusted EBITDA, which are not measurements determined in
accordance with the U.S. generally accepted accounting principles,
or GAAP, because we believe these measures provide additional
metrics to evaluate our operations and which we believe, when
considered with both our GAAP results and the reconciliation to net
income, provide a more complete understanding of our business than
could be obtained absent this disclosure. We use EBITDA and
Adjusted EBITDA, together with financial measures prepared in
accordance with GAAP, such as revenue and cash flows from
operations, to assess our historical and prospective operating
performance and to enhance our understanding of our core operating
performance. The use of EBITDA and Adjusted EBITDA as performance
measures permits a comparative assessment of our operating
performance relative to our performance based upon GAAP results
while isolating the effects of some items that vary from period to
period without any correlation to core operating performance or
that vary widely among similar companies.
- Represents non-cash stock
compensation expense associated with awards of restricted shares of
our common stock and stock options to our key employees and our
independent directors.
- Represents non-cash changes in the
fair value of contingent earn-out liabilities related to our
acquisitions, non-cash charges related to asset disposals, asset
impairments, including intangible asset impairment charges, and
certain third-party deal costs incurred in connection with our
acquisitions or financing arrangements.
- Represents duplicate rent and
occupancy costs for our Los Angeles, CA facility.
THE CHEFS’ WAREHOUSE,
INC.RECONCILIATION OF ADJUSTED NET LOSS TO NET
LOSS(unaudited; in thousands except share amounts
and per share data)
|
Thirteen Weeks Ended |
|
March 26, 2021 |
|
March 27, 2020 |
Net loss |
$ |
(17,921 |
) |
|
$ |
(14,085 |
) |
|
|
|
|
Adjustments to Reconcile Net
Loss to Adjusted Net Loss (1): |
|
|
|
Other operating expenses (2) |
(1,170 |
) |
|
(6,336 |
) |
Duplicate rent (3) |
695 |
|
|
698 |
|
Tax effect of adjustments (4) |
131 |
|
|
2,058 |
|
|
|
|
|
Total adjustments |
(344 |
) |
|
(3,580 |
) |
|
|
|
|
Adjusted net loss |
$ |
(18,265 |
) |
|
$ |
(17,665 |
) |
|
|
|
|
Diluted adjusted loss per
common share |
$ |
(0.50 |
) |
|
$ |
(0.60 |
) |
|
|
|
|
Diluted shares outstanding -
adjusted |
36,401,748 |
|
|
29,621,433 |
|
- We are presenting adjusted net income and adjusted earnings per
common share (EPS), which are not measurements determined in
accordance with U.S. generally accepted accounting principles, or
GAAP, because we believe these measures provide additional metrics
to evaluate our operations and which we believe, when considered
with both our GAAP results and the reconciliation to net income
available to common stockholders, provide a more complete
understanding of our business than could be obtained absent this
disclosure. We use adjusted net income available to common
stockholders and adjusted EPS, together with financial measures
prepared in accordance with GAAP, such as revenue and cash flows
from operations, to assess our historical and prospective operating
performance and to enhance our understanding of our core operating
performance. The use of adjusted net income available to common
stockholders and adjusted EPS as performance measures permits a
comparative assessment of our operating performance relative to our
performance based upon our GAAP results while isolating the effects
of some items that vary from period to period without any
correlation to core operating performance or that vary widely among
similar companies.
- Represents non-cash changes in the fair value of contingent
earn-out liabilities related to our acquisitions, non-cash charges
related to asset disposals, asset impairments, including intangible
asset impairments, and certain third-party deal costs incurred in
connection with our acquisitions or financing arrangements.
- Represents duplicate rent and occupancy costs for our Los
Angeles, CA facility.
- Represents the tax effect of items 2 through 3 above.
THE CHEFS’ WAREHOUSE,
INC.RECONCILIATION OF ADJUSTED EARNINGS PER COMMON
SHARE(unaudited; in thousands except share amounts
and per share data)
|
Thirteen Weeks Ended |
|
March 26, 2021 |
|
March 27, 2020 |
Numerator: |
|
|
|
Adjusted net loss |
$ |
(18,265 |
) |
|
$ |
(17,665 |
) |
Denominator: |
|
|
|
Weighted average basic common
shares outstanding |
36,401,748 |
|
|
29,621,433 |
|
Weighted average diluted
common shares outstanding |
36,401,748 |
|
|
29,621,433 |
|
|
|
|
|
Adjusted earnings per
share: |
|
|
|
Diluted |
$ |
(0.50 |
) |
|
$ |
(0.60 |
) |
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